The Russian government has approved sweeping changes to its cryptocurrency tax framework, as the country seeks to balance the interests of miners, businesses and state agencies.
These changes reflect a growing effort to regulate the growing digital currency sector while addressing economic and infrastructure challenges.
Key Changes in Cryptocurrency Taxation in Russia
Under the revised bill, cryptocurrencies will be classified as property for tax purposes. Income from mining activities will be taxed based on the market value at the time of receipt. Notably, miners will be able to deduct expenses incurred during the mining process, bringing some relief to this capital-intensive industry.
The government has also clarified that cryptocurrency transactions will be exempt from value-added tax (VAT). Instead, income from these transactions will be included in the same tax base as securities. This will cap personal income tax on cryptocurrency-related income at 15%.
“After discussions with businesses, a decision was made on the possibility of imposing taxes on financial results from mining as the fairest reflection of the results of this activity. This approach is aimed at maintaining a balance between the interests of businesses and the state,” Interfax reported, citing the Finance Ministry.
The amendment comes as the government tightens control, as evidenced by President Vladimir Putin signing a law that transfers oversight of the cryptocurrency mining register to the Federal Tax Service (FNS).
Industrial miners are now required to register with the FNS, while individual miners working from home remain exempt if their energy consumption is below prescribed thresholds.
Since November 1, cryptocurrency mining has been limited to businesses and registered investors. Individual miners face a monthly electricity consumption limit of 6K kilowatt-hours (kWh), underscoring the country’s efforts to manage the energy demands of cryptocurrency mining operations.
FNS has also proposed a controversial two-stage tax system that would include a tax on unrealized gains — cryptocurrency that miners have not yet sold. While the move is intended to ensure tax compliance, it could complicate miners' operations, especially in a market downturn.
Beyond the tax aspect, Russia is facing a challenge related to the energy demands of cryptocurrency mining. From December 2024 to March 2025, energy-stressed regions will be subject to a temporary mining ban. Many regions, such as Irkutsk, Chechnya, and the Donetsk People’s Republic (DPR), are among them.
Calculating Steps Towards Regulation
These measures, prompted by concerns about subsidized electricity and regional shortages, underscore the government's struggle to balance the economic benefits of cryptocurrencies and its energy needs.
“The Russian Ministry of Energy is cracking down on mining rigs in energy-stressed regions like Irkutsk, Chechnya, and the DPR. The reason? Subsidized electricity + limited supply = confusing priorities. The conclusion is clear: energy ≠ infinite, and miners may need to get smarter or more resourceful,” commented Mario Nawfal on X.
Amid these regulatory developments, Sberbank, Russia's largest bank, announced a pilot program for cryptocurrency-based transactions. The initiative complements ongoing testing of a digital ruble and discussions about issuing a state-backed stablecoin. The efforts signal Russia's larger strategy to integrate digital currencies into its financial system.
Russia's crypto tax journey began in 2020 when the government first introduced the bill. Approved in its first reading in 2021, the bill has undergone several delays amid controversy over balancing innovation with regulation. Now, with these amendments, Russia is positioning itself as one of the key players on the global crypto scene.
Experts believe these measures are aimed at attracting institutional investors and investing in a stable cryptocurrency environment, even as the country faces sanctions and economic isolation. By taxing cryptocurrency-related income and enforcing energy restrictions, Russia appears determined to strike a balance between growth and governance.
Still, while the new regulations provide much-needed clarity, challenges remain. The two-tier tax system and power caps could pose challenges for small-scale miners, who may struggle to stay profitable under the new framework. However, larger institutional mining operations may find opportunities in this regulated environment.
As Russia tightens controls on the cryptocurrency sector, the question is whether these measures will promote innovation and stability or stifle development.
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