Russia Proposes Separate Regulation for NFTs

The Center for Strategic Research (CSR) in Russia has proposed introducing separate regulations for non-fungible tokens (NFTs) and for entities that ensure the synchronization and consistency of the transfer of tokenized property rights and their records on the blockchain, according to a report by Vedomosti. This initiative is outlined in the center’s report, “Virtual Assets: NFTs and Virtual Items in Computer Games and Metaverses.”

The CSR recommended creating a distinct regulatory framework for NFTs due to the lack of clear definitions and legal regimes for them in Russian law. The report also examines legal regulation concerning virtual items in computer games and play-to-earn metaverse models.

The Bank of Russia has not yet received this report, a representative told Vedomosti. However, the regulation of certain types of NFTs could be addressed within the law on investment platforms, the representative added. The Central Bank plans to work on these issues with financial market participants in the near future.

Legal Uncertainty and Proposed Changes

The CSR notes that the definition and legal status of NFTs remain unclear. Therefore, the first step should be to amend the article on digital rights in the Civil Code to specify that the concept of digital rights can include tokens not explicitly mentioned in the law. According to the report’s authors, this would allow for the issuance and circulation of NFTs without changing the general article on civil rights objects.

If NFTs are defined under the Civil Code as “other” property, then for the Tax Code, tokens would be recognized as property and, accordingly, as goods. This means they would not be taxed upon purchase or mining. However, NFTs could be subject to VAT unless special provisions are introduced into the Tax Code.

Proposed Mechanism for Regulating Tokenized Property Rights

For the separate regulation of tokenized property rights, the CSR suggests, among other options, introducing an agent functionally similar to an escrow agent. This agent could monitor the safety of tokenized items and ensure that changes recorded on the blockchain are synchronized with the transfer of property rights.