Russia’s New Cryptocurrency Bill Gives Definition to Smart Contracts

Friday, April 6, 2018

Russia’s parliament members Anatoly Aksakov, Igor Divinski, and Oleg Nikolaev, as well as senator Nikolai Zhuravlev have presented a bill on digital financial assets that defines cryptocurrencies and tokens as property while banning their usage as means of payment.

The bill defines digital financial assets, including cryptocurrencies and tokens, and legally establishes a new kind of contract concluded electronically, i.e. smart contract enforced with digital financial technologies.

It also defines key differences between cryptocurrencies and tokens. The latter has to have a single issuer while the former may have numerous issuers or miners. They also differ in the purpose of their issuance.

The bill also explicitly stipulates that digital financial assets cannot be construed as a legal tender within Russia, but are recognized as property.

The paper defines digital records and digital transactions, creates legal ground for new kinds of operations like mining, as well as validation of digital records in a distributed ledger.

The bill allows for exchange of tokens for rubles or foreign currencies only via digital asset exchange operators, which can be only brokers, dealers, legal entities engaged in trust management, and exchange platforms. The list of other legal exchange operations for digital assets will be created by the Bank of Russia in cooperation with the government.

An article of the bill also establishes a regulatory framework for ICOs: a token may have only one issuer, while the maximum amount an unqualified investor can spend on tokens over a single generation event is to be established by the Bank of Russia.

The bill’s authors state that its purpose is to give legally enforceable definitions of “the most widespread financial assets created or issued with the help of digital financial technologies”, and to create legal conditions for fundraising by Russian legal entities and individual entrepreneurs with tokens.

Earlier this year, Russia’s ministry of finance has published a bill on digital assets regulation, which, among other things, defines cryptocurrencies, tokens, mining, and ICO’s.

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