A new means of payment in international settlements
Pepeliaev Group advises that, on 11 March, Federal Law No. 45-FZFederal Law No. 45-FZ “On amending individual items of the legislation of the Russian Federation” dated 11 March 2024
came into force whereby it is permitted to use digital rights as a means of payment in foreign trade.
Digital rights are understood to be digital financial assets (DFA), utilitarian digital rights, as well as digital rights that include DFA and utilitarian digital rights at the same time (‘hybrid’ digital rights).
Settlements with the use of digital rights are permitted only between residents and non-residents that are determined in line with the currency legislation and only under foreign trade contracts; they are recognised as currency transactions.
Such transactions will be subject to currency control and AML/CFT control.
Where are the settlements conducted?
Currency transactions with digital rights are conducted in the information systems of such systems’ operators, in which digital financial assets are issuedFederal Law No. 259-FZ “On digital financial assets, digital currencies and on amending certain items of Russian legislation” dated 31 July 2020
, as well as in the investment platforms of investment platform operators where utilitarian digital rights are issuedFederal Law No. 259-FZ “On attracting investments using investment platforms and on amening individual items of the legislation of the Russian Federation” dated 2 August 2019
, i.e. on platforms registered in the Russian Federation.
Comment
This means that, to make settlements using digital rights, the non-resident as well as the resident must register on the relevant Russian digital platform, while the digital asset is marketed only within the territory of Russia. The law does not put forward unified requirements for the procedure of users gaining access to the information system in which the issuing and circulation of digital rights takes place. Such a procedure is established by each operator in the Rules of its platform. Please note that a differentiated approach may be applied with respect to the requirements for registering a user for the latter to be granted access in different systems.
When are settlements with digital rights possible?
Within the framework of settlements, currency transactions with digital rights may be performed only under foreign trade contracts between residents and non-residents in a case when they are used as a means of payment for goods delivered, work performed, services rendered, or information and IP items transferred, including intellectual rights to them.
The Bank of Russia, together with the executive body authorised by the Government,Such a body has not yet been determined
may establish a ban on performing individual types of currency transactions connected with the acquisition and disposal of digital rights and the conditions of performing individual types of currency transactions connected with the acquisition and disposal of digital rights.
Comment
Currency legislation does not treat loan agreements as foreign trade contracts. Consequently, it is not permitted to grant or receive loans between residents and non-residents in digital rights.
The Bank of Russia’s plans with respect to introducing additional restrictions on transactions with digital rights are not yet known.
The Bank of Russia will also establish the specifics of how residents are to provide supporting documents and exchange data and information during the performance of currency transactions with digital rights.
Compulsory control
Changes in connection with the introduction of settlements with digital rights are also made to AML/CFT legislationFederal Law No. 115-FZ “On combating the legalisation (laundering) of the proceeds of crime and financing of terrorism” dated 7 August 2001.
.
A currency transaction between a resident and a non-resident is subject to compulsory control if the amount of such transaction involving the transfer of digital rights is equal to or is greater than RUB 1 million or the equivalent of this amount in foreign currency.
Operators of information systems, in which digital financial assets are issued, and operators of a digital financial asset exchange will submit information regarding such transactions to the Russian Federal Financial Monitoring Service (known by the Russian abbreviation “Rosfinmonitoring”).
Comment
The amendments outlined above are aimed at overcoming difficulties in international settlements. However, for such an opportunity to be actively used further measures are required on the part of the regulator, and the market of digital financial assets itself must be growing.
What to think about and what to do
Companies conducting foreign trade are recommended to consider cross-border settlements with the use of digital rights as an alternative to bank account settlements. New means of payment may lift the pressure of sanctions and the risks of payments being refused or of such payments being frozen in the banking system.
Help from your adviser
The experts of Pepeliaev Group have extensive expertise in the spheres of effecting cross-border settlements, currency regulation and currency control legislation as well as measures established by decrees of the Russian President.
We are ready to provide support to those involved in foreign trade on the issues of conducting settlements with foreign contracting parties, including with the use of digital rights.