The Russian government is in the process of finalizing the federal law for the regulation of cryptocurrencies and initial coin offerings. The draft law has now been officially published. It regulates the creation, issuance, storage, and circulation of cryptocurrencies.
Legal Crypto Definitions
The Russian government has officially published the draft federal law entitled “On Digital Financial Assets” which regulates cryptocurrencies in Russia.
This draft law was introduced by the country’s finance ministry at the end of December. It was followed by much discussion and amendments to the bill before it was finally released to the public on Wednesday. Article 5 of the document states that “This federal law shall enter into force 90 days after the date of its official publication.” According to the document:
This federal law regulates the relations arising in the creation, issuance, storage and circulation of digital financial assets, as well as the exercise of rights and performance of obligations under smart contracts.
The draft law provides Russia’s official cryptocurrency-related definitions for the first time including the definition of cryptocurrency, tokens, smart contracts, crypto exchanges, and mining.
Cryptocurrency is defined as “a type of digital financial asset created and accounted for in the distributed registry of digital transactions by participants in this registry in accordance with the rules of maintaining the registry of digital transactions.” Meanwhile, a token is defined as “a type of a digital financial asset that is issued by a legal entity or an individual entrepreneur (hereinafter referred to as an issuer) in order to attract financing and is recorded in the registry of digital records.”
As for mining, it is deemed “an entrepreneurial activity aimed at creating a cryptocurrency and / or validation in order to receive compensation in the form of a cryptocurrency.” Mining activities are subsequently described as “legally valid” actions.
Rights to Exchange to Other Assets
The document clarifies that Russians have the right to trade their cryptocurrencies for other digital assets and for fiat currency, stating:
Holders of digital financial assets have the right to make transactions for the exchange of digital financial assets of one type for digital financial assets of another type and / or the exchange of digital financial assets for rubles, foreign currency and / or other property only through the exchange operator of digital financial assets.
“Citizens of Russia will be able to buy and sell cryptocurrencies and tokens only through professional participants of the securities market,” Forbes Russia emphasized.
Exchanges and Wallets
After providing the definition of cryptocurrency exchanges, the document proceeds to explain, as also previously reported by news.Bitcoin.com.
Operators of the exchange of digital financial assets can only be legal entities.
The exchanges must be “established in accordance with the legislation of the Russian Federation and carry out the types of activities specified in Articles 3 to 5 of Federal Law No. 39-FZ of April 22, 1996 ‘On the Securities Market’.” Alternatively, they can also be “legal entities that are the organizers of trade in accordance with the Federal Law of November 21, 2011 No. 325-FZ ‘On Organized Trading’.”
The document also puts restrictions on wallets. A wallet is defined as “a software and hardware tool that allows you to store information about digital records and provide access.” However, the draft law states that a wallet must be “opened by the operator of exchange of digital financial assets only after passing the procedures of identification of its owner in accordance with the Federal Law of August 7, 2001.”
Token Sales and Their Investors
A large part of the document addresses initial coin offerings (ICOs). It specifies rules for token sales such as the issuing procedures and what documents and information need to be disclosed prior to the sales. For each ICO, the issuer must also provide an investment memorandum containing all information related to the issuer and the tokens. The rules state:
An offer for the release of tokens, an investment memorandum, rules for keeping the register of digital transactions, as well as other documents…must be published no later than 3 working days before specified in the offer for the release of tokens.
Furthermore, tokens “may not be offered to potential purchasers in any form or by any means using advertising” prior to the publication of an offer for the release of tokens. In addition, the draft law imposes restrictions on non-qualified investors, stating:
Persons who are not qualified investors in accordance with the Federal Law No. 39-FZ of April 22, 1996 ‘On the Securities Market’ can purchase tokens in the amount of not more than fifty thousand rubles within a single issue.