The State Duma's Financial Market Committee has revised the draft law on digital currency and digital rights for its second reading. The new version suggests changing the mechanism for blocking transfers related to illegal cryptocurrency transactions.

The original draft included two registers to be maintained by an authorized body:

  • the first for legal entities, individual entrepreneurs, and foreigners conducting cryptocurrency transactions outside the legal market participants;
  • the second for foreign payment providers facilitating transfers to individuals on the first list (foreign banks were not included).

Both lists have been removed in the revised draft. Instead, the term "unauthorized recipient" has been introduced. This refers to a recipient of funds that the bank suspects is conducting digital currency transactions without being a legal market participant in Russia.

The draft does not define the criteria for suspicion nor assigns this responsibility to the Bank of Russia. Each financial institution will establish these criteria independently in their internal documents.

Banks will report information about "unauthorized recipients" to the Central Bank. In response, the regulator can only provide data on foreign payment service providers that facilitate transfers on behalf of these recipients. The draft does not require the publication of this information.

Who Will Deny Transfers

The revised draft has removed payment agents, telecom operators, postal service operators, and participants of the digital ruble platform from the mechanism. The obligation to deny transfers remains with credit institutions, branches of foreign banks, and payment card issuers.

The bank must immediately notify the client of the denial, following the procedure outlined in the contract. However, the document does not specify how to notify the unauthorized recipient or how to contest the blocking.

A bank is not required to deny a transfer in three cases:

  • the operation is related to a foreign trade contract;
  • the transfer is made on behalf of an organization exchanging digital currency;
  • the transaction is initiated by a broker or trust manager, if permitted by the Bank of Russia.

The State Duma plans to review the draft law for its second reading on July 21.

Recall that in early July, the first deputy chairman of the Central Bank, Vladimir Chistyukhin, stated that the law regulating the cryptocurrency market in Russia would come into effect on September 1.