Russian President Vladimir Putin has declared that Bitcoin and cryptocurrencies are now legal property in Russia, in a strategic move aimed at reshaping the Russian economy amid domestic and international challenges. 🪙📜 The new law regulates cryptocurrencies, turning them into taxable assets, and exempts mining and sales from value-added tax provided that activities are reported to authorities. Failure to comply exposes violators to fines of up to 40,000 rubles (about $380). ⚠️💸
The laws also extend to trading with graduated taxes: 13% on profits below 2.4 million rubles ($22,300) and 15% above that, while cryptocurrency companies will be taxed at 25% starting next year. 📊🖋 The government expects to generate up to 200 billion rubles annually from the expanding mining sector, capitalizing on Russia’s position as a global mining powerhouse thanks to its abundance of cheap energy. ⚡⛏️
The role of cryptocurrencies in confronting sanctions
In an effort to circumvent Western sanctions, Russia has launched a pilot program for cross-border cryptocurrency transactions, allowing it to buy banned goods despite international restrictions. 🌐💱 The decentralized nature of cryptocurrencies gives Russia an advantage in bypassing Western oversight, a concern for the United States, which has warned international banks against working with Moscow in this area. 🛑🏦
The Russian Economy: Challenges and Opportunities
Despite these developments, the Russian economy is under significant pressure. The ruble hit its lowest level since 2022, recording 114 against the dollar before recovering slightly to 110. 📉💵 The central bank faced significant challenges in stabilizing the currency amid inflation that reached 8.5% in October, which directly affected commodity prices. 🥔🧈
Economic pressures are being exacerbated by Western sanctions and increased military spending to support the war, with defense expenditures soaring. 💣🛡️ However, Putin insists that Russia will not sacrifice the well-being of its citizens for military priorities. 🍞🛠️
Future outlook
Despite the challenges, the IMF expects the Russian economy to grow by 3.6% in 2024, but growth is expected to slow to 1.3% in 2025. 📅📈 In these circumstances, Bitcoin is emerging as a key tool in Russia’s economic strategy, reflecting a mix of opportunities and risks in the face of sanctions and economic difficulties. 🌟🪙