Authorities in Russia are discussing two very different approaches to the regulation of cryptocurrencies and related activities. While the Bank of Russia is reportedly seeking to introduce a ban on buying crypto assets, lawmakers are moving forward with efforts to adopt rules for mining, exchange, and taxation that would effectively legalize cryptocurrencies.
Russian Officials Debate Over Alternative Crypto Regulations
Russian institutions, including the central bank and the lower house of parliament, the State Duma, are mulling over how to put the country’s growing crypto space in order. The head of the Duma’s Financial Market Committee, Anatoly Aksakov, revealed that officials are now discussing “two diametrically opposite approaches” to the regulation of cryptocurrencies — a complete ban or alternatively, legalization of crypto trading.
Quoted by the Interfax news agency, the high-ranking lawmaker elaborated that talks are focused on how to legally define the new financial instruments and how to tax them. They should be finalized during the spring session of the Russian parliament so that Russia has clear regulations in place for the 2023 tax year. Aksakov pointed out that the State Duma has already adopted on first reading a draft law on the taxation of cryptocurrencies.
The new bill, which recognizes digital currencies such as bitcoin as property for tax purposes, was submitted to the house a full year ago. Deputies gave their initial approval for the draft in January 2021, when the law “On Digital Financial Assets” went into force. Commenting on the matter, the chairman of the Duma Committee on Legislation, Pavel Krasheninnikov, emphasized that before taxing cryptocurrency, Russia needs to legalize it.
Anatoly Aksakov further explained that some regulatory proposals are very tough and envisage the full prohibition of the acquisition and ownership of cryptocurrencies. Another approach is to authorize the establishment of cryptocurrency exchanges and ensure their operations are transparent for regulatory bodies which will also make it easier for the Federal Tax Service to tax their transactions.
Another area that deserves attention is cryptocurrency mining, which has been expanding as an industry in the energy-rich Russian Federation. Aksakov has been a supporter of the idea of registering mining as a business activity and taxing it accordingly. Such a move would also allow Russia to introduce higher electricity rates for mining enterprises which now often use subsidized energy at household prices.