Russian President Vladimir Putin signed a law recognizing Bitcoin and other cryptocurrencies as legal property, introducing new taxes and regulations.
The New Law and Its Implications
The new law amends Russia’s Tax Code, turning cryptocurrency into a taxable asset. Mining and sales are exempted from VAT, but miners must report their activities to local authorities or face a 40,000 ruble fine. A tiered tax system is introduced: 13% on earnings up to 2.4 million rubles and 15% on anything higher. Starting next year, all crypto companies will face a standard tax rate of 25%.
Mining and Sanctions Workaround
Russia remains a top player in crypto mining due to its cheap energy. On November 1, a government-backed database for large-scale miners was launched. Russia’s Central Bank has also approved a pilot program for cross-border crypto transactions, allowing potential circumvention of sanctions to purchase goods internationally.
Ruble Crisis and Economic Challenges
While Bitcoin is being legitimized, the ruble has reached a low of 114 against the US dollar. Russia’s central bank intervened by halting foreign currency purchases domestically to stabilize the ruble. Despite partial recovery to 110 per dollar, analysts warn of a looming currency crisis. Inflation reached 8.5% as sanctions and military spending put additional pressure on the economy.
Russia legitimizes Bitcoin to bolster its economy amid sanctions and a currency crisis. The new cryptocurrency regulations present both challenges and opportunities.
