Russian MPs propose to introduce the concept of NFTs into the country’s legislation

The “New People” parliamentary fraction members Vladislav Davankov and Anton Tkachev submitted a draft law that will protect NFT owners.

A stock photo featuring an NFT coin and a gavel.

“We have to protect the rights of NFT owners. Currently, such a concept doesn’t exist in the Russian legal field at all, and people continue to conduct transactions involving NFTs at their own risk,” said Anton Tkachev. “In terms of cryptocurrencies, there’s been a development, but NFT isn’t a cryptocurrency but a digital certificate of ownership. That means it’s an object of intellectual property, that’s why we propose to regulate NFTs as intellectual property.”

The explanatory note to the draft clarifies that NFTs should be recognized “as a non-fungible token of the unique digital asset (image, video, or other digital content or asset) in the form of non-fungible data stored in the system of the distributed ledger (blockchain system).”

However, some experts pointed out the flaws of the proposed draft. “The authors haven’t even stated what type of the intellectual property they propose to attribute NFTs to, so it’s unclear how exactly they plan to protect it,” said Anatoliy Semenov, the deputy chairman of the Russian Union of Industrialists and Entrepreneurs committee on intellectual property, in his interview with Russian business paper “Kommersant.”

Since January 1, 2021, Russia has enacted legislation that legalizes cryptocurrencies but maintains strict limits on their usage. The law on digital financial assets prohibits purchasing goods and services with crypto but allows to use it as a type of investment. However, Russia’s Industry and Trade Minister Denis Manturov recently made a big statement when asked if the country will ever implement cryptocurrencies as a form of payment.

“The question is, when this occurs, how it will be regulated, given that the central bank and government are actively working on it. However, the general consensus is that… sooner or later, this will be implemented in some form,” the minister stated.

Russia has a long story of disagreement between key policymakers on the role of cryptocurrencies in the economy. Russia’s Ministry of Finance is known for its “If you can’t beat ‘em, join ‘em” approach to crypto, calling for legalization and taxation, while the Central Bank continues to follow the hard line. The governor of the Central Bank, Elvira Nabiullina, even proposed a total ban on cryptocurrency trading and mining, citing its threats to financial stability.

However, the freezing of assets and growing economic pressure from the Western sanctions forced Russia to consider digital assets as an alternative to the traditional banking system. For instance, the Federal Taxation Service has recently asked the Ministry of Finance to allow businesses to settle their foreign trade in crypto. If accepted, such a proposition would require updating current legislation that doesn’t allow to pay for goods and services in cryptocurrencies.

For now, Vladimir Putin seems to take the side of the Ministry of Finance in the argument. In January, the president backed crypto mining and called for the government and central bank to come up with a joint solution on the regulation of cryptocurrencies.