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Russia: Cryptocurrency to Fiat Transactions Exceeding $9,600 Must Be Reported

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Russia: Cryptocurrency to Fiat Transactions Exceeding $9,600 Must Be Reported

In the latest development, the Russian Federation announced on April 12, 2018, that all crypto transactions that exceed 600 rubles must be scrutinized.

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On March 6, 2018, the Russian Ministry of Finance reportedly announced it was formulating a regulation to criminalize the use of blockchain-based virtual currencies as legal tender. Deputy Finance Minister Alexei Moiseev revealed that his office had “prepared a draft law on criminal liability for the turnover of money surrogates.”

Also, On March 9, reports emerged that Russia’s President Vladimir Putin has given a deadline of July 1, 2018, for the legalization of the crypto markets.

According to Russian news outlet, Izvestia, the latest report states that all crypto-to-fiat transactions amounting to more than 600,000 rubles (roughly $9,600) are subject to currency exchange regulation. The head of the National Financial Board Anatoly Aksakov has reiterated that the review has yet to be presented to the State Duma.

Per Izvestia, fiat transactions above 600,000 rubles are already closely monitored, as part of efforts to prevent money laundering and terrorism financing.

Notably, the latest “Digital Financial Assets” draft bill, which was presented to the State Duma on March 20, 2018, states that bitcoin and digital tokens are digital financial assets that must only be traded on regulated exchanges.

In essence, cryptocurrencies are not to be used for payments.

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Furthermore, the draft requires all organizers of initial coin offerings (ICOs) to conduct proper KYC operations. Cryptocurrency exchanges have also been mandated to operate following article five of the Russian Federal Law 115-FZ, and the licenses of defaulting exchanges will be seized.

Additionally, authorized exchanges are to verify user accounts to confirm they comply with anti-money laundering (AML) and counter-terrorism financing (CTF) laws.

The president of the Russian Association of Cryptocurrency and Blockchain (RACIB), Yuri Pripachkin has criticized the latest version of the regulation. He stated that making crypto transactions to be controlled by the Federal Financial Monitoring Service is not a smart move as it could lead to the exodus of local miners to other “crypto-friendly” states.

Taxation

While nothing was said about how virtual currency miners may be taxed, Teiimuraz Vashakmadze, an associate professor at the Russian Presidential Academy of National Economy and Public Administration, has hinted that a 13 percent tax could be hammered on digital asset transactions.

Vashakmadze was also quick to admit that taxing digital currency traders could prove a herculean task, due to the anonymous nature of cryptocurrency trading:

“If the person themselves does not announce that they bought and sold Bitcoins, then no one will know about it, so many people will not voluntarily declare such income.”

Russians are not the only ones finding it difficult to declare their crypto gains for tax purposes. In February 2018, BTCManager reported that the U.S Internal Revenue Service had also claimed that only a handful of people had paid their crypto taxes.

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