Russia Is In the Final Stage of Introducing A Bill to Legalize Cryptocurrencies

In the latest development, the Russian Finance Ministry has recently drafted a bill “On Digital currency” and sent it to the government for approval. The bill calls for recognizing cryptocurrencies as legal tender if passed into law.


The draft bill also clarifies provisions on trading digital assets as well as crypto mining. Besides, it also seeks to bring more clarity relating to the issuance, circulation, mining, and trading of digital asserts along with other activities in the market.


The new law in the draft bill defines ‘digital currency’ as a set of electronic data contained in an information system that can be accepted as a means of payment that is not the monetary unit of the Russian Federation, or as an investment”.


Furthermore, the bill talks about categorizing crypto investors as qualified investors or professional purchasers of digital currency”. These investors will have unrestricted access to digital assets.


On the other hand, ordinary Russian citizens will have a capping on their crypto investments. These retail players will be able to purchase a maximum of 600,000 rubles or $7,000 worth of digital assets every year. Interestingly, these Russian citizens will have to pass an exam.


If the retail Russian investors fail to pass this test, they cannot buy cryptocurrencies worth more than 50,000 rubles annually.


On the other hand, the draft bill also talks about the tax structures. It mentions the implementation of VAT over the sale of digital assets, corporate income tax as well as personal income tax on crypto profits.


As per the bill, VAT will be subject to the services of information systems operators who issue digital financial assets (DFA). The bill notes that the amendments to the tax code concerning the taxation of crypto transactions could be adopted in parallel with the draft law “On digital currency”.


This includes crypto transactions done through Russian banks as well as identification of holders by crypto wallets. Furthermore, the Association of Banks of Russia - a consortium of 300 Russian banks and financial institutions - have asked lawmakers to criminalize crypto storage outside of centralized exchanges on noncustodial wallets.


Non-custodial crypto wallets often provider users with greater control over their crypto holdings as it doesn’t involve any third party. However, it seems that the Association of Banks of Russia isn’t happy with this. Thus, they are working jointly with Ministry of Internal Affairs to bring criminal liability for those holding crypto on non-custodial wallets.