Cryptocurrencies will not yet be a legitimate means of payment in Russia

State Duma Committee on State Construction intends on Wednesday to support in the first reading the initiative that fixes in the Civil Code of the Russian Federation the basic norms in the field of digital economy. This will help regulate and develop the market of new economic relations facilities that are used only online (tokens, cryptocurrency), the authors of the bill believe. However, digital money will not yet become a legitimate means of payment. Experts call the crypto currency “promising” object, which is important to include in the legal field.

The draft amendments to the Civil Code were submitted to the State Duma by Speaker Vyacheslav Volodin and Head of the State Construction Committee Pavel Krasheninnikov (United Russia) in March 2018. Earlier, President Vladimir Putin instructed the government and the Central Bank to determine the status of the crypto-currency: with all the risks, it is necessary to take advantage of new technological solutions in the banking sector, he said.

The purpose of the bill is to create a legal basis for the circulation of digital rights, the commission and execution of transactions with them, Pavel Krasheninnikov explained to Izvestia.

“We eliminate the existing risks of using digital objects in order to withdraw assets into an uncontrolled digital environment – for example, to legalize the proceeds of crime, or to withdraw from foreclosure during bankruptcy, or to finance terrorism,” the deputy said.

Due to the lack of regulation of the market for crypto-currencies and tokens, participants in transactions with them may be unprotected, the explanatory note to the draft law says. Without legal protection, there are also third parties – for example, creditors or heirs.

At the same time, digital money does not become a legal means of payment, it follows from the bill. It is not necessary to accept them for payment, credited to accounts and deposits or transferred to the territory of the Russian Federation. In the future, they will be used as a means of payment “in controlled quantities”. The conditions will be subsequently established by a separate law, developed with the participation of the Central Bank, the Ministry of Finance and the Ministry of Economic Development.

To simplify the signing of “smart contracts” the bill equates digital confirmation of the identified user to his written consent. After that, the transaction is automatically considered to be perfect and can be disputed only in the case of third-party interference in the operation of the computer program. Also, the bill legalizes the process of collecting and processing significant amounts of information (big data).

State Duma Committee on State Construction intends to support the initiative on Wednesday in the first reading, Pavel Krasheninnikov told Izvestia. Earlier, the project approved the legal department of the State Duma, pointing out that instead of the concepts “digital law” and “digital money” it is advisable to use the concepts of “token” and “crypto-currency” that are used in practice.

In the economic block of the government and the Central Bank also believe that the rule on digital money is not yet ready, so for the second reading it will be removed from the project, Pavel Krasheninnikov said.

The bill does not solve all the tasks set by the president, but creates basic conditions for further regulation of the industry, said Igor Sudets, director of the educational program “Blockade for Lawyers” of the Plekhanov Russian Economic University.

– It is important that the crypto currency and tokens are included in the legal field of the Russian Federation. On the one hand, these are opportunities that we do not have the right to miss. On the other hand, while they are outside the legal field, they can be used to give bribes, withdraw money from bankruptcy, pay black salaries and simply kidnap them – for this nothing will happen, “he stressed.

If the crypto currency is not legalized in one form or another, Russia will miss the opportunity to withdraw from the shadow and consolidate a number of serious financial flows on its territory, the expert believes.

The adoption of a legislative act regulating the circulation of crypto-currencies should be assessed positively, according to Yelena Tsaturyan, leading legal counsel of the KSC groups. She recalled that in Japan, crypto-currencies received in some part the status of a payment instrument, and in the European Union bitcoin is recognized as a currency for tax purposes. Russia can not stand aside from resolving the issue of determining the legal nature of the crypto currency, the expert is convinced.

“There is a contradictory situation, in which bitcoin is not officially recognized by the state, but incomes from operations with digital currency are subject to taxation,” said Elena Tsaturyan.

At the same time, the introduction of digital money into civil circulation must be carried out consistently, without haste, she stressed.

At the plenary session, the bill is scheduled to be considered next week.