CONTENTS OF LAST ISSUE
Digital financial assets
On July 31, Federal Law No. 259-ФЗ “On Digital Financial Assets, Digital Currency and Amendments to Certain Legislative Acts of the Russian Federation” (hereinafter, the Law) was published.
This regulatory legal act has been significantly revised since its adoption by the State Duma of the Russian Federation in the first reading on May 22, 2018. Thus, a virtually new version of the Law was developed for the second reading. Initially, it was planned to essentially ban the issue and turnover of cryptocurrencies and determine liability for any direct or indirect participation in such activities. However, such strict measures caused criticism from business and experts, so they were not included in the final version of the law (which does not exclude the possibility of introducing such measures later by separate acts).
Simultaneously, FATF1 considered turnover of tokens and cryptocurrencies, and certain recommendations were developed for making amendments to the national legislation. As a result, at the beginning of this year, the draft law was passed in the second reading with significant amendments regarding regulation of cryptocurrencies.
The law shall become effective on January 1, 2021 (except for certain provisions) and shall define digital financial assets (hereinafter, DFA) as digital rights that include, inter alia:
- monetary claims;
- ability to exercise rights associated with equity securities;
- participation interest in the capital of non-public JSC.
DFA may be issued, recognized and traded only by making (changing) entries in the information system based on the distributed ledger (blockchain), and in other information systems.
DFA shall be issued under a resolution on the issue. It shall specify the type and scope of rights that are certified by the issued DFA, and other information. A resolution on the issue shall be posted on the website of the DFA issuer, and on the website of the operator of the issuing information system. A resolution on the issue may be recognized as a public offer if it is addressed to the general public. A resolution on the issue of DFA certifying the ability to exercise rights associated with equity securities or certifying the right to claim transfer of equity securities or certifying the participation interest in the capital of a non-public JSC shall not be addressed to the general public.
DFA shall be accounted for in the issuing system. As a general rule, records on DFA may be entered or changed by order of the person that issued such assets, as well as their owner. Individuals registered as individual entrepreneurs and legal entities (commercial and non-commercial organizations) are entitled to make entries on the issue of digital financial assets in the information system. One may access the system only with a unique code, and a resolution on the issue shall be executed in e-form and signed with an enhanced qualified digital signature. Moreover, a resolution on the issue of DFA should be publicly available on the Internet until the obligations to all asset holders are fully fulfilled. The Bank of Russia is entitled to determine attributes of DFA that may be acquired by unqualified investors, and to limit the amount of their investments in such assets.
It is allowed to make transactions with cryptocurrency, but at the same time it is forbidden to use it as a payment instrument. The law contains no limited list of transactions that are allowed to be made with DFA. However, the purchase and sale of DFA, as well as the exchange of DFA of one type for the same assets of another type (including DFA issued under the foreign legislation, and digital rights that include both DFA and other digital rights) are mentioned separately.
Transactions shall be concluded via the exchange operator. These mainly include banks and stock exchanges. However, other legal entities that are included by the Bank of Russia in the register thereof may become such operators.
The circle of DFA purchasers is not limited by the Law. However, the Law separately provides for the right of the Bank of Russia to determine characteristics of DFA that may only be acquired by qualified investors and/or attributes of DFA that may be acquired by non-qualified investors only within the amount of cash and/or total cost of other DFA transferred as consideration set by the Bank of Russia.
Therefore, the Law will allow to convert traditional financial instruments into a digital form and increase the number of ways to attract investments. Cryptocurrencies will get the status of a standard financial asset and become a way to invest available money. It is not the last regulatory act that will regulate cryptocurrencies, because in autumn a more detailed draft law is planned to be introduced that is likely to define the rules of mining, among other things.
- Financial Action Task Force on Money Laundering (FATF) is an intergovernmental organisation that develops global standards for anti-money laundering measures and combating the financing of terrorism (AML/CFT), and evaluates the compliance of 228 national AML/CFT systems with these standards.
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