Russia to Allow Cryptocurrencies for “Contractual” Payments

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  • Russia will allow cryptocurrencies to be used as a “contractual” means of payment in the country, partially lifting the crypto payment ban.
  • Russia may consider cryptocurrencies as an opponent to its CBDC.
  • The country also plans to release a digital prototype of the national fiat currency by the end of this year.

According to a recent report, Pavel Krasheninnikov, Russian Duma Committee on State Building and Legislation chairman, announced that cryptocurrencies can be used as a “contractual” means of payment in the country.

Russia had previously, in 2017, completely banned crypto assets in the country calling them “dubious.” Though in 2020, the Russian lawmakers approved legal status for cryptocurrencies that authorized possession, acquisition, and transfer of these tokens legal, yet not allowing for using them as payment.

Krasheninnikov stated that cryptocurrencies do not currently represent a legal payment method in Russia, meaning merchants and businesses are not obliged to accept it. However, if all involved parties show consent, they can accept crypto as payment. He stated:

We believe that it is necessary to make amendments to the Civil Code, the initiative is currently undergoing a necessary approval procedure. Currently there is an understanding that digital currency is not legal as payment but this payment method, quite possibly, can be contractual.

Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, has previously stated that legalizing crypto payments would essentially mean the “destruction of the financial system.” It can be deduced that Russia looks upon cryptocurrencies as an opponent to the Russian Central Bank and its upcoming CBDC – the Digital Ruble.

Russia CBDC to Launch This Year

The Central Bank of Russia (CBR) is reportedly planning to release a digital prototype of the national fiat (digital ruble) by the end of 2021. According to the report, transfers between private individuals will be free of charge.

Russia’s intentions to release its own digital money dates back to 2017 when the country collaborated with Ethereum creator Vitalik Buterin to launch “Ethereum Russia.” Ethereum Russia was a collaboration agreement with an aim to provide education, events, and architecture review for VEB, as well as providing support to the development of a new center for blockchain research.

The fact that Russia is becoming more crypto-friendly as the launch date of its CBDC is approaching is in many ways expected. People who become familiar with decentralized cryptocurrencies as a form of digital money are more likely to adopt the country’s digital ruble very quickly.