In this story we will site the opinion of the founder and CEO of Tokenomica –Artem Tolkachev, blockchain and tokenization key opinion leader in the CIS region on new Russian Federation crypto law for digitalized payment instruments. The core of Tolkachev’s opinion is that this law make regulatory basis only for tokenized papers but nothing for cryptocurrency itself.
Russian Federation law makes have adopted first crypto legislation after the discussion of all crypto regulation aspects within recent five years. Such numerous discussions have caused the bill “On digital financial assets” to have a lot of version greatly varying one from each other.
The version on tokenized assets was the subject of discussion did have much related to the cryptocurrencies. Another version offered imprisonement for large amount of cryptocurrency and large fines for lesser amounts.
Currently acting version bans purchasing products and services and mentions that crypto issuance and trading aspects will be mentioned in separate laws planned for further discussions.
Everything happened in such a way because so expected crypto law has nothing to do with crypto at all.
What new law brings
Based on new law definitions the DFA (digital financial assets) suppose digital right such as monetary claims, the option of performance of rights on the issued papers as well as the possibility to become the part of LLC and claim issued papers transfer. Generally speaking DFA suppose tokenized papers and new law is designed for their regulation.
Such tokes can be bought for fiat (EUR,USD, RUR) and other DFA and can be exchanged for other digital utility assets. But they can’t be purchased for “digital currencies” – new identification of crypto based on this Russian law.
At the same time it is worth paying attention to one main principle set in this new law:
“Digital currency is a set of electronic data (digital code) contained in the information system […] in respect of which there is no person obligated to each owner of such electronic data.”
It is important as such definition might cause the problems for TOP-20 crypto based on Russian legislation. It might negatively influence Tether (USDT), TrueUSD (TUSD) or XRP as holding such token supposes wide range of obligations and such law will impede such tokens legal trade.
Startups will not work in a proper manner
This law will not prompt Russian startups development as well as the regulations suppose DFA issuance on certified platforms with very strict rules.
The company, for requited licenses obtaining needs having very complicate structure with the options of internal control, management etc.
Due to the fact that such structure is designed for large scale companies medium and small scale companies will not have enough resources to fit such conditions.
So the role of startups will be performed by those who have appropriate licenses and according business reputation. Such supposition can be confirmed by the fact that this sector’s activities will be controlled by the Central Bank of Russia.
Another drawback is that this sector will have difficulties in attracting foreign investors due to its isolation.
One more obstacle is that the platforms need to have KYC (Know Your Customer) module as it is required by the legislation and have no requirements for blockchain technologies used at the aforementioned platforms
Outside of that, there are several technical requirements that issuance platforms must have, including performing Know Your Customer verification, and they must be able to freeze or confiscate assets if decided by authorities. However, there are no blockchain requirements for issuance platforms. Basically, the platform may be built without blockchain technology.
The most possible ways is that someone will start working in sum a way and will make regulators to change their minds. But for this moment projects work in an unregulated manner or outside of Russia.