With cryptocurrency a hot topic in Russia, the authorities in the country are currently contemplating two completely different approaches for regulating the industry and its related activities. According to reports, the Bank of Russia is in favor of banning crypto assets altogether, whereas lawmakers are moving ahead in their efforts to develop rules for crypto exchange, mining, and taxation that would help legalize the industry in the country. Institutions in the Russian Federation, which includes the lower house of the parliament called State Duma and the central bank, are mulling over how to bring the expanding crypto sector in the country in order.
The leader of the Financial Market Committee of the Duma, Anatoly Aksakov disclosed that ‘two diametrically opposite approaches’ were being discussed by officials when it comes to the regulation of crypto; either legalize crypto trading or impose a complete ban. The high-ranking member of the parliament said that there were ongoing discussions on how the new financial instruments can be legally defined and taxed. They are expected to come to a final decision in the spring session of the State Duma, which would allow Russia to impose the regulations for the tax year in 2023.
Aksakov revealed that a draft law regarding the taxation of crypto had already been adopted by the Russian parliament in the first reading. According to the new bill, cryptocurrencies like bitcoin are classified as property for the purpose of taxation and had been submitted almost a year ago. In January 2021, the draft had received the approval of the deputies, when they had implemented the ‘On Digital Financial Assets’ law into effect. Pavel Krasheninnikov, the head of the Duma Committee on Legislation, said that it was first essential for Russia to legalize cryptocurrency before it can think about taxing it.
Anatoly Aksakov had also elaborated that there are some tough regulatory proposals and are in favor of completely prohibiting ownership and acquisition of cryptocurrencies. Authorizing the setup of crypto exchanges is another approach, along with ensuring that they conduct their operations in a transparent manner for regulatory bodies. Doing so will be helpful for the Federal Tax Service when it comes to taxing transactions. Crypto mining is another area that needs to be focused on, as the industry has expanded significantly in the Russian Federation because of its energy-rich status. Aksakov has been in favor of recognizing mining as an entrepreneurial activity and taxing it.
This move would also help Russia in charging higher electricity rates from mining companies, which are currently paying household prices for subsidized energy. In other news, media reports indicate that the Central Bank of Russia (CBR) wants to ban crypto investments, as they believe it could be a risk to the financial stability of the country. According to the CBR, these risks are on the rise because of increasing crypto transactions. The regulator has opposed the legalization of cryptocurrencies, referring to them as ‘money surrogates’. It is also not in favor of introducing them as a means of payment.