Russian State Duma Passes Digital Currency Bill in First Reading, Central Bank to Control Market Access and Transaction Regulation

On April 22, it was reported that the Russian State Duma (the lower house of parliament) has passed the “Digital Currency and Digital Rights Bill” in its first reading, marking a significant step towards the legalization of crypto assets in the country. According to the bill, the Bank of Russia will become the core regulatory body for the crypto market, responsible for issuing licenses, approving or prohibiting related transactions, and defining the legality of transactions. The bill aims to classify cryptocurrencies as “property,” but explicitly prohibits their use as a means of payment domestically, with the ruble remaining the only legal tender. However, in the context of Western sanctions, crypto assets can be used for cross-border trade settlements, including service payments and intellectual property transfers. Additionally, the bill allows Russian residents to legally invest in crypto assets through licensed institutions but will implement a tiered investor system, imposing testing and annual investment limits for ordinary investors (with a suggested cap of 300,000 rubles). Initially, only high-market-cap mainstream assets like Bitcoin and Ethereum will be allowed for trading, with a whitelist to be established by the central bank. The bill is expected to be formally passed and take effect by July 2026 at the latest. However, some lawmakers and banking professionals have criticized the stringent regulations, arguing that they may affect market activity and lead to funds remaining in the gray market. Furthermore, accompanying legislation is expected to introduce criminal penalties, with a maximum of 7 years imprisonment for illegal crypto trading.