Russia's Cryptocurrency Sector is Picking Up Steam
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IndraStra Global

Russia's Cryptocurrency Sector is Picking Up Steam

IndraStra Global News Team

Russia's Crypto Currency Sector is Picking Up Steam

Image Attribute: KryptoMoney

For the first time, Russia's Ministry of Labor released an updated document consisting the recommendations on the declaration of incomes of government officials, has included a mandate for digital currencies. Russian civil servants are exempted from indicating their individual assets in the form of cryptocurrencies in the tax declaration certificate. But if relatives or friends donate any legal tender in the form of money, then that has to be reflected. According to the experts, there is a risk of obtaining bribes in the cryptocurrency, especially at the time of legalizing it through regular transaction channels.

Since 2009, Russian civil servants publicly report their incomes and since 2013, it is necessary to report on all sort of large spendings. As per the regulations, By April 1 (of any calendar year), the declaration has to be submitted by the president, members of the government, federal civil servants and employees of the presidential administration. And by April 30 (of any calendar year), regional and municipal officials, employees of the Central Bank, employees of the Pension Fund of Russia, the Social Insurance Fund, the Mandatory Health Insurance Fund, state-owned corporations submit their declarations. 

The On-going Efforts to Legalize the Cryptocurrency Trading in Russia

On December 28, 2017, the Russian Ministry of Finance has presented a draft bill to legalize the trading of cryptocurrencies on approved exchanges, according to a report published by Rambler News Service (RNS). The Deputy Finance Minister Alexei Moiseev has indicated that the government is seeking to provide greater oversight. He said:

"This is the fact that buying and selling [of cryptocurrencies] will be somehow standardized. The general idea is that it will be necessary to buy and sell on official exchanges, as it will be declared, it will be legalized.”

Following the presentation of a drafted bill to place regulations on the usage of cryptocurrency in Russia, a list developed by Russia's Ministry of Finance of approved cryptocurrency exchanges where trading is being conducted. The bill defines the concept of smart contact and regulation of ICO but it makes no provisions for any type of national digital currency. It defines cryptocurrencies as "other property" and does not acknowledge them as monetary instruments. But more importantly, the ministry also proposes the crypto-tax on any income generated through cryptocurrencies by the individual entrepreneurs and legal entities.

However, Russia's Central Bank opposed this initiative. The question of digital-currency trading is under discussion as part of the development of the law and additional comments at this stage are “premature,” the central bank said through its press service. Much of the trading of cryptocurrencies currently takes place on mostly unregulated markets, not the regulated ones where stocks, bonds, and other conventional assets change hands. President Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, and initial coin offerings, as well as defining everything that relates to digital money, by July 2018.

Despite the Central Bank's reservation, the proposed legislation in the form of the draft bill is a refreshing turn in Russia’s attitude toward cryptocurrency regulation (the interest was flared up right after the sanctions were approved) and is intended to make the crypto landscape in Russia more stable. Also, the blockchain technology behind the cryptocurrencies doesn’t have harsh regulations and gives enough room to Russia to circumvent the sanctions and bypass the global financial system which is predominantly owned and managed by the west.

Recent Development:

Lately, Russia is experiencing a surge in crypto infrastructure investment. According to a TASS press release, Aleksey Kolesnik, a Russian businessman, has indirectly confirmed the acquisition of the two power stations for cryptocurrency mining. One in Perm Region, on the western slopes of the Middle Ural Mountains, and the other one is situated in the neighboring Republic of Udmurtia. The stations were reportedly purchased at about 160 million rubles (about US$3 million) from T Plus owned by tycoon Viktor Vekselberg.

"Plans are in store to set up a data processing center, which is not limited to mining. Moreover, there is the Yarovaya legislation saying that information should be stored in Russia, as a data processing center is an ordinary server room," Kolesnik told the publication. "We are also considering the option with cryptocurrency, though there are no plans to work closely on it until a legal base is provided," he added.