Russia will treat cryptocurrencies as a taxable property

Russia has changed its bill regulating crypto and digital resources. You will not go to prison for favoring cryptocurrencies in the country - at least, not yet.

A neutral approach

At first, Russian politicians had opted for a version of the law that would have made any business that emitted or traded cryptocurrencies using Russia-based infrastructure illegal, causing the crypto community to react and criticism from various branches of government. .

The new draft, however, is more neutral. Cryptocurrencies are described as a type of property that cannot be accepted as a means of payment. Any legal action relating to the ownership of the cryptocurrency can be considered by the courts only if the plaintiffs have reported their holdings in cryptocurrencies and transactions for tax purposes.

A digital currency, according to the bill, is a set of digital data that can be used as a payment method or an instrument investment and it is not managed by a central body "with the exception of the operator and (or) the nodes of these systems, which are only responsible for maintaining the digital data transmission and updating of this system."

Lawmakers argue that the issue and flow of cryptocurrencies in Russia should be regulated by other laws. At the moment, the bill has been approved in the second hearing, which is the most important in the Russian legislative process.

There are three rounds of hearings to pass any bill, but after the second, the text of a bill is considered final. The document, which was initially devoted only to the regulation of digital securities, ultimately simply included a mention of digital currency and its basic definition.

The main part of the bill, however, outlines the rules for activities such as the digital actions of a company, both on a distributed ledger and in "another type of system".

Issuers of these activities should register with the Bank of Russia and have senior managers with financial experience. The issuer of such a system should centrally control it and should be able to modify the ledger in case a court decides it.

Compromise

The law is expected to enter into force in January 2021. Not much will change for the cryptocurrency industry in Russia, says attorney Mikhail Uspensky. “The only thing absolutely prohibited is to consider crypto instruments as payment for goods and services, which was the main premise of the Bank of Russia.

But having a coffee at the bar and paying with bitcoin is still kind of exotic, "said Uspensky. He added that the current version of the bill is a compromise between the Bank of Russia which has taken a very cautious approach, other governing bodies and the crypto community.

Uspensky concluded by saying that politicians "have decided to mention only the cryptocurrency so far, forbidding to use it as a payment, but to postpone the decision on more important issues, such as criminal cases [related to cryptocurrency], OTC cryptocurrencies and so on" .