New Russian Law Bans Bitcoin Payments for Goods and Services

Russian lawmakers have passed a bill that gives legal status to cryptocurrencies such as bitcoin – but bans them from being used to pay for goods and services.

Legislators approved the Digital Financial Assets (DFA) bill on July 22 after its third and final reading.

It had already won backing from senior lawmakers like Anatoly Aksakov, who heads parliament’s financial markets committee.

The new law recognizes digital assets “as an aggregate of electronic data capable of being accepted as the payment means… [but] cannot be used at the same time to pay for any goods and services,” according to a report by news agency Tass.

Russians retain the legal right to buy and hold bitcoin (BTC) and other crypto assets as an investment, but there’s a catch. “Possession of digital currency, its acquisition and transfer by legal means are allowed only if declared,” the law demands.

Per the Tass report, Russia’s central bank will assume an important role in the regulation of virtual currencies. “The central bank will have the right to determine features of digital assets accessible by qualified investors only,” the news agency reported.

Furthermore, virtual currencies “can be issued, purchased and sold and registered within the framework of special information systems” and “systems and their operators shall conform to Russian laws and stand filed in a relevant register kept by the Bank of Russia.”

In a country where BTC is held with so much skepticism, the approved bill on digital assets represents a significantly watered down version of the original. An earlier version of the law proposed to levy fines of up to $7,000 or seven years in jail for individuals buying bitcoin with cash.

It also planned to punish companies that issue or operate virtual currencies without approval from the Russian central bank, with fines of up to two million rubles or about $28,000.