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Russia’s State Duma Committee on State Construction was scheduled to hold the first reading of amendments to the country’s civil code pertaining to digital currency today, but is not expected to make digital currency a legitimate method of payment, according to Izvestia, the news portal of the Ministry of Information Technologies.
The bill, which the State Duma Committee on State Construction plans to support, will establish a legal basis for digital rights and digital transactions, Head of the State Construction Committee Pavel Krasheninnikov told Izvestia.
Experts, meanwhile, consider cryptocurrency a “promising” entity, making it worth including in the country’s legal arena.
Amendments were sent in March to Krasheninnikov and Vyacheslav Volodin, the State Duma Speaker.
President Vladimir Putin previously told the central bank and the government to provide an assessment of cryptocurrency, including all the risks it involves and whether it is necessary to utilize new technological solutions in banking.
Officials believe the law will eliminate risks of digital objects being used to place assets in an uncontrolled environment, by which proceeds of crime can become legalized.
Users of cryptocurrencies can be unprotected on account of insufficient regulation, according to the draft.
While digital currency does not become a legal method of payment, it follows from the bill that in the future, such currencies will be used as payment “in controlled quantities.” By that time, a separate law by the Ministry of Finance, the Ministry of Economic Development and the Central Bank will establish the conditions by which such payment can occur.
The bill considers digital confirmation of an identified user as his written consent, serving as a means of signing a “smart contract.” A transaction is considered complete after signing and can only be disputed if there is third party interference in the computer program’s operation.
The bill also legalizes processing and collecting large amounts of information.
The State Duma’s legal department has been advised to use the concepts “cryptocurrency” and “token” rather than “digital money” and “digital law,” based on terms that are used in practice.
The bill does not address all of the president’s directives, but its presents conditions for further regulation of the digital currency industry, said Igor Sudets, director of the Plekhanov Russian Economic University’s “Blockade for Lawyers” educational program.
Because cryptocurrencies and tokens are currently outside the legal arena, they can be used for bribes, withdrawing funds from bankruptcy, paying “black” salaries, Sudets said.
If cryptocurrency is not legalized in one form or another, Russia will miss the opportunity to withdraw from the shadows and consolidate a number of serious financial flows on its territory, the expert believes.
Yelena Tsaturyan, legal counsel for the KSC groups, said a regulation of cryptocurrencies should be a positive development. In Japan, cryptocurrencies have received some legal status as an instrument of payment, while the European Union has recognized bitcoin as a currency for tax purposes.
Tsaturyan said Russia cannot ignore addressing the legal status of cryptocurrency. She said it is a “contradictory situation” where the state does not recognize bitcoin but income from digital currency operations are taxed. She said digital currency should be introduced into circulation.
The bill is scheduled for consideration at a plenary session next week.
Images from Shutterstock
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