On November 27, the Federation Council of Russia passed a key federal bill, which has been approved by the State Duma and is now awaiting the signature of President Vladimir Putin to come into effect.
Once this bill becomes law, it will officially define digital currencies as property and exempt cryptocurrency transactions from value-added tax (VAT), laying the foundation for the tax framework of cryptocurrency trading and mining activities in Russia.
New tax and regulatory framework for cryptocurrency
Russia is establishing a tax framework for cryptocurrency trading and mining activities through new legislation. The new law stipulates that the income from cryptocurrency sales will be subject to personal income tax at a rate of 13% to 15%, in line with the tax rates for securities trading. At the same time, mining operators will be exempt from value-added tax but are required to report their mining activities to the tax authorities. Mining income will be taxed based on the market value at the time of receipt to ensure fairness in taxation.
For those who do not comply with reporting requirements, Russia will impose a fine of 40,000 rubles (approximately $360), a harsh measure occurring against the backdrop of the Bitcoin-to-ruble exchange rate hitting a historical high.
The new legislation allows for the use of digital currencies in foreign trade transactions within the Russian legal system, paving the way for the legitimate application of digital currencies in international trade. At the same time, authorized mining infrastructure operators in Russia will continue to enjoy tax-exempt status, aimed at encouraging legal mining activities while ensuring the achievement of tax objectives.
While strengthening regulation, the Russian government announced a winter cryptocurrency mining restriction plan a week ago to prevent power shortages. Mining activities in regions such as Irkutsk and Buryatia in Siberia will be suspended from December to mid-March, and it is expected that similar seasonal bans will continue until before 2031.
In addition, a year-round mining ban will be implemented in the North Caucasus region and Russian-controlled areas of Ukraine, such as Donetsk and Kherson, starting in 2024. These measures have been approved by a government committee led by Deputy Prime Minister Alexander Novak.
Surge in cryptocurrency trading activity in Russia
Recently, as Bitcoin prices soared to nearly $100,000, enthusiasm in the global cryptocurrency market was ignited, and the Russian market also showed a distinct increase in activity.
According to a recent research report by MegaFon, a major telecommunications operator in Russia, network visits to the country's main cryptocurrency trading platforms increased by 8% in early November compared to the previous month. This growth is not only driven by the surge in Bitcoin prices but is also closely related to recent adjustments in Russian cryptocurrency regulations.
MegaFon's survey data indicates that globally, the network visits to the 20 major cryptocurrency exchanges are on the rise, with growth rates between 8% and 10% compared to the previous statistical period.
Russian users account for as much as 27% to 30% of the total visits to these 20 platforms, highlighting the growing interest and participation of Russian users in the cryptocurrency market.
Conclusion:
The approval of the cryptocurrency tax bill in Russia, awaiting signature, is significant as it clearly outlines tax and regulatory measures that balance industry development and tax administration, opens up pathways for the application of digital currencies in foreign trade, and considers energy and environmental regulations for mining.
At the same time, influenced by the rise in Bitcoin prices and regulatory adjustments, the activity level of cryptocurrency trading in Russia has surged, highlighting market attention and participation.
In summary, once the bill is signed and comes into effect, Russia is expected to open a new chapter in the legalization and standardized development of cryptocurrency, enhancing its competitiveness in the global market and promoting healthy industry development.