Cryptocurrency mining should be recognized as an entrepreneurial activity under Russian law and taxed accordingly, representatives of key ministries in Moscow and the parliament have indicated. Officials believe the regulatory move would benefit both the state and the crypto industry.
Russian Government to Collect Millions of Dollars in Taxes After Legalizing Crypto Mining
While the law “On Digital Financial Assets” — which entered into force in January this year — regulates certain crypto-related activities such as “digital currency issuance,” it does not explicitly mention cryptocurrency mining. The sector remains unregulated, the Russian Ministry of Finance has recently acknowledged in comments to the local press. The industry has been expanding in Russia which is rich in energy resources and ranks among the world’s top destinations in terms of share of the global hashrate.
According to the Ministry of Economic Development, Izvestia wrote in an article, mining should be regulated precisely as an entrepreneurial activity as it fits in the legal definition provided in the Civil Code. It emphasized this would allow the government to tax miners’ revenue and increase budget receipts. Alexey Minaev, deputy director of the ministry’s Digital Economy Development Department, told the Russian daily:
This is exactly an area in which the state can benefit in the form of taxes, and people can legalize their income, big business is also becoming more and more interested in this.
Valery Petrov, vice president for market development and regulation at the Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (Racib), noted that miners rarely return the proceeds from minted cryptocurrency to Russia as they find it difficult to prove the funds have been obtained legally.
The annual revenues from the mining of bitcoin (BTC) alone have been estimated at $19.7 billion, with Russia accounting for around 12% of the total amount, or $2.4 billion. Petrov claims the Russian Federation has lost millions of dollars in recent years due to the failure of the government to regulate and tax the business.