Russian President Vladimir Putin has officially signed a law prohibiting the use of digital assets for payments in the country.

This means that digital assets cannot be used in Russia as payment "for goods transferred, works performed, services rendered."

The law gives the right to exchange operators not to process transactions using digital financial assets (UFA) for payment.

DFA includes all digital assets, including cryptocurrencies. The law also prohibits payments using utilitarian Digital Rights (UDR).

Chairman of the Financial Market Commission Anatoly Aksakov in the State Duma, the lower house of the Russian parliament, proposed the law on June 7, and the parliament approved it on July 8.

Until now, there has been no law in the country prohibiting the use of digital assets for payment purposes. However, he banned "money surrogates" and considers the ruble the only legal tender in the country.

The law will come into force 10 days after publication in the official Gazette.

However, the law does not prohibit digital assets, which means that other options for their use are possible, including payments in international trade.

Currently, Russia is under severe economic sanctions because of its situation in Ukraine. Some government officials support the proposal to allow crypto payments in trading with partners.

Mixed Cryptocurrency Signals from Russia

Meanwhile, the country has not yet introduced regulation of cryptocurrencies. In 2021, the law "On Digital Financial Assets" was adopted, which introduced two legal terms — DFA and UDR.

Officials explained that DFA refers to cryptocurrencies, and UDR covers all other types of tokens.

In addition, at the end of this year, the country's legislators will consider a new bill on digital currencies. It is expected that the law will provide greater clarity in regulation.

Despite all the regulatory gaps, cryptocurrencies remain one of the main topics in Russia. World powers, including the United States, believe that the country circumvents sanctions by using cryptocurrencies.

However, experts said that the chances of this are very small due to the public nature of the blockchain and the size of the Russian economy.

For their part, the Russian authorities are beginning to see the potential in cryptocurrencies and digital assets after initially considering the possibility of their complete ban.

In January, Putin expressed support for bitcoin mining, saying that the country has advantages such as excess electricity and well-trained personnel.