According to reports, Russia’s Finance Ministry is considering relaxing the country’s policies on crypto investments and trade. The country has long been skeptical of Bitcoin and other cryptocurrencies, not only for reasons of security but also because of its lack of ties to a central bank. However, recent moves by regulators in Japan have prompted Moscow to reconsider its stance on the issue and as a result Russian Officials are debating alternative crypto regulations.
Regulation of cryptocurrencies and related activities in Russia is being discussed from two very different perspectives. While the Russian Central Bank is reportedly considering a ban on the purchase of crypto assets, lawmakers are working towards adopting mining, exchange, and tax rules that will effectively legalize cryptocurrencies.
Russia’s Central Bank Debates Plans To Legalize Cryptocurrency Trading
State Duma, the lower house of the Russian parliament, and the central bank are considering how to deal with the country’s growing crypto market. Anatoly Aksakov, head of the Duma’s Financial Market Committee, said the Russian government is now considering “diametrically opposite approaches” to regulating cryptocurrencies – a complete ban or, alternatively, legalizing crypto trading.
Interfax quoted the high-ranking lawmaker as saying that talks are focused on defining and taxing the new financial instruments. During the spring session of the Russian parliament, these regulations should be finalized so that Russia will have clear regulations in place for the 2023 tax year. Asakov pointed out that the Duma has already adopted on first reading a draft law recognizing cryptocurrencies as property for tax purposes. The bill actually was submitted a year ago. After the law “On Digital Financial Assets” went into effect in January 2021, the draft was first approved by lawmakers.In his comments, Pavel Krasheninnikov, chairman of the Duma Committee on Legislation, emphasized that before taxing cryptocurrency, Russia must first legalize it.
Anatoly Aksakov explained that some regulatory proposals are very strict and envisage the complete prohibition of cryptocurrency ownership and acquisition. Another option is to approve cryptocurrency exchanges and ensure their operations are transparent for regulatory bodies. This will also make taxing their transactions easier for the Federal Tax Service.
In the energy-rich Russian Federation, cryptocurrency mining has been growing as an industry. Aksakov has supported the idea of taxing mining as a business. Russia could also increase electricity rates for mining companies that currently use subsidised energy at household prices.
Bank of Russia Wants to Prohibit Cryptocurrency Investments
The Central Bank of Russia (CBR) is attempting to impose a ban on cryptocurrency investments, citing risks they may pose to the country’s financial stability, as reported by the media. It says these risks are increasing with the spread of crypto transactions. Regulations have been opposed to the legalization of cryptocurrency circulation in the Russian economy, calling assets such as bitcoin “money surrogates” and opposing their adoption as payment methods.
The Russian monetary authority has been discussing a possible ban on new purchases of crypto assets with market participants and experts, according to two sources from the Russian financial sector quoted by Reuters. According to one of them, speaking on the condition of anonymity, the restrictive measure would not affect previous acquisitions. According to another source close to the CBR, the central bank presently rejects all cryptocurrencies.
In response to a question, Bank of Russia stated that it is currently preparing an advisory report on the subject but declined to elaborate in detail. A working group on cryptocurrency regulation has been formed at the State Duma, and it will begin meeting in December. The group will review a report prepared by the Central Bank of Russia.
The Bank of Russia recently published its Financial Stability Overview for the second and third quarters of 2021, which included estimates by financial institutions. institutions, according to which the annual volume of digital currency transactions made by Russian residents amounts to around $5 billion. A cryptocurrency operation can pose a significant risk to the stability of the financial system and the interests of investors, the authority warned.
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