Introduction
Digital assets can liberate businesses from current international payment systems, such as SWIFT, which Russia currently faces difficulties with. This article explains what digital national currency, cryptocurrency, and digital financial assets are, and how they can be legally used both in Russia and abroad.
What Is Digital National Currency?
Digital national currency is the national currency that exists solely in electronic form; it cannot be physically held. Central banks of various countries issue it alongside traditional money forms like paper banknotes and non-cash money. Often, the term “digital currency” is used broadly to encompass cryptocurrencies and various digital monies. For clarity, here we refer to digital currency as CBDC—Central Bank Digital Currency.
Issuance and Issuers:
Digital national currency is issued and maintained by a central bank or another authorized entity. For example, in Russia, the digital ruble is the third form of national money, alongside cash and non-cash rubles. It is currently in a pilot phase involving 13 banks, with plans for nationwide availability in 2025.
Technical Operation:
The digital ruble operates technically on a blockchain system. Each digital ruble is uniquely coded and stored on the digital ruble platform managed by the Bank of Russia. Transactions are tracked in real time, unlike physical banknotes, whose transactions are recorded only at certain intervals. This enables the central bank to monitor transactions closely and prevents fraud.
Usage:
The digital ruble functions as a means of payment—users can buy or sell goods and services, transfer funds, or exchange it for traditional cash or non-cash rubles. Transfers between individuals and businesses will be fast and free until the end of 2025. Payments can even be made offline, without internet access. However, it is not possible to obtain a loan in digital rubles or deposit them for interest.
International Context:
Countries like China are piloting digital yuan operations; Jamaica and Nigeria have already launched digital national currencies (digital naira since 2021), while the Bahamas were the first to officially introduce a CBDC in 2019.
What Is Cryptocurrency?
Cryptocurrency is digital money issued without government control. It has no physical form and exists only online, often without real-asset backing. It is widely used for exchanges, payments, and investment.
Issuance:
There is no central issuer; cryptocurrencies are produced primarily through mining—creating new blockchain blocks by performing complex mathematical calculations on computers. Miners are rewarded with cryptocurrency for each new block, which is essential for transaction processing and system continuity.
Technical Operation:
Cryptocurrencies operate on blockchain—a decentralized chain of data blocks that records transactions and transfers digital money without intermediaries such as banks. Information is stored on multiple nodes worldwide, ensuring security and transparency.
Usage and Legal Status in Russia:
Although recognized as a means of payment by law, cryptocurrency cannot currently be used to pay for goods and services within Russia. It is considered property under Russian legislation. International contracts cannot generally use cryptocurrency payments, as it is not recognized as a payment method. However, the Bank of Russia is exploring an experimental legal framework that may allow cryptocurrency payments for foreign trade activities.
Taxation and Legal Mining:
Since November 1, cryptocurrency mining has become a legitimate entrepreneurial activity by government decree. Individuals and organizations must register with the Federal Tax Service to mine legally (except individuals), and energy usage limits and reporting on mined cryptocurrency and wallets apply. Some companies involved in energy transmission are prohibited from mining.
Global Context:
Europe broadly recognizes cryptocurrency as a means of payment. Hong Kong treats it as a virtual asset, Japan has regulated it since 2017, and Canada considers it a commodity taxed accordingly. Some countries, including Ecuador, Nepal, and mainland China, have banned cryptocurrency.
What Are Digital Financial Assets?
Digital financial assets (DFAs) are electronic equivalents of real assets such as shares, securities, goods, or property rights. In essence, various traditional assets—from real estate to monetary claims—can be digitized as DFAs. This market is still developing, including identifying the types of assets suitable to be issued as DFAs.
Issuance:
In Russia, DFAs are issued by individual entrepreneurs and legal entities that comply with relevant laws, on platforms registered with the Bank of Russia.
Regulation:
DFAs are regulated by state authorities under Federal Law No. 259-FZ, which governs their issuance, accounting, and circulation. Unlike cryptocurrencies, which are largely unregulated, DFAs operate under strict state oversight.
Technical Operation:
Both cryptocurrencies and DFAs use blockchain technology, but their similarity ends there. Blockchain and smart contracts enable automated transactions for DFAs without intermediaries. The issuance platforms are regulated, making the acquisition and sale of digital assets both fast and secure.
Usage:
DFAs are used for investments, digitally securing rights to traditional assets, and for settling foreign trade contracts. Since January 11, 2025, foreign trade contracts involving DFAs above certain thresholds must be registered with a bank, which monitors transaction details. Russian residents have 15 working days post-transaction to report contract details to banks.
International Context:
While China prohibits DFAs, countries like Kazakhstan, Japan, Malta, and the UK have dedicated DFA legislation. In Canada, Sweden, the US, and others, regulation is either in progress or DFAs are treated similarly to securities.
Summary Table: Major Differences Between Financial Instruments
| Feature | Digital National Currency (CBDC) | Cryptocurrency | Digital Financial Assets (DFAs) |
|---|---|---|---|
| Issuer | Central bank | Decentralized; no central issuer | Individual entrepreneurs and legal entities |
| Legal Regulation | Strictly regulated by state | Minimal regulation; not centrally controlled | State-regulated under Federal Law No. 259-FZ |
| Usage | Payment, transfer, exchange | Investment, exchange; limited legal payments | Investment, digital rights to assets, contracts |
| Technology | Blockchain | Blockchain | Blockchain |
| Control | Centralized | Decentralized | Centralized (regulated platforms) |
Frequently Asked Questions
- Which countries besides Russia have digital national currencies?
Nigeria, Jamaica, and the Bahamas actively use digital currencies. China is piloting its digital yuan; other countries like South Africa, Sweden, Kazakhstan, Singapore, Malaysia, and Saudi Arabia are developing their own CBDCs. - What currencies qualify as digital currencies?
The term includes cryptocurrencies (regulated under law as digital currencies) and other digital monies. Here, digital currency refers to CBDCs issued by central banks, backed by the state like the digital ruble. Cryptocurrencies are typically results of mining and their value can fluctuate widely. - How will the digital ruble be used?
Like the traditional ruble, it facilitates buying, selling, transferring, and exchanging for cash or non-cash rubles. Transfers will be quick and free before the end of 2025. - How can cryptocurrency be used?
Payment in Russia for goods and services is prohibited, though it may be allowed for foreign trade under an experimental legal program announced by the Bank of Russia. - What about digital financial assets?
They serve as investment tools and digital confirmation of rights on traditional assets, issued and controlled by authorized platforms registered with the Bank of Russia.
This detailed overview provides clarity on the distinctions and legal frameworks for digital national currencies, cryptocurrencies, and digital financial assets, outlining their technological foundations, issuance, regulation, and uses in Russia and worldwide.
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