Russia is on the brink of significant changes in its approach to crypto taxation. The recent approval by the Federation Council of a tax bill could reshape the digital asset landscape for traders.
Taxation of Crypto Transactions in Russia
Russia is rapidly moving to regulate its crypto sector by unveiling a new tax framework classifying digital currencies as property. The new regulations target individual traders while exempting authorized mining operations. Under the new legislation, cryptocurrency transactions will be subject to a graduated tax system. Individuals earning up to 2.4 million rubles annually (around $21,210) from crypto activities will be taxed at 13%, while earnings exceeding this amount will be taxed at a rate of 15%.
Crypto Mining Monitoring and New Restrictions
While crypto traders face new tax obligations, miners receive a reprieve. Mining operators will be exempt from value-added tax (VAT) on mined coins, providing a significant incentive for businesses in the industry. The exemption applies to coins mined via authorized platforms, creating a clear distinction between regulated and unregulated activities. Russia is tightening control over crypto mining by limiting unregistered operations to 6,000 kilowatt-hours of energy per month. Starting December 1, due to electricity shortages, regional mining bans will be imposed until March 2025. Additionally, mining companies must provide detailed reports about their operations to the Russian tax authorities. Non-compliance with these reporting requirements could lead to fines of up to 40,000 rubles (around $360).
Bitcoin's Rise and Impact on Crypto Exchange in Russia
This legislative overhaul comes at a crucial time for both Bitcoin and the ruble. On November 27, Bitcoin hit an all-time high of 11 million rubles per coin, fueled by a global rally and the ruble’s 25% drop against the US dollar over the past year. The Bitcoin price surge has directly impacted Russia’s crypto exchange activity. The bearish outlook of the ruble has caused traders and investors to turn to crypto investments. According to MegaFon, global internet traffic to major exchanges increased by 8%. Russian users account for 27-30% of total traffic on major platforms. Crypto exchanges like Deribit saw a 126% traffic increase, and platforms like HTX and KuCoin recorded increases of 24% and 23%, respectively.
The proposed changes in tax legislation and mining control signal Russia's intent to create a clear and transparent regulatory environment for the cryptocurrency market. These measures can significantly impact traders and miners, setting new rules in the country's financial market.
