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Russia will regulate its crypto industry instead of imposing a ban on crypto trading and mining. The move is seen as a step towards legitimizing the $2 trillion asset class and is projected to contribute up to $13 billion in crypto tax each year.
A document published on the Russian government’s official website on Tuesday night detailed the principles for the regulation of cryptocurrencies, Coindesk reported. Surprisingly, the plan reportedly has the support of the Central Bank of Russia, which previously pushed for a blanket ban on crypto and argued that the speculative nature of the industry could pose a threat to financial stability.
The government and the Bank of Russia are preparing a draft law which is expected to be completed by February 18, according to The Block. The draft will define crypto as an “analogue of currencies” and not as digital financial assets. In addition, crypto can only be used “in the legal sector” subject to identification requirements, which can be done through the banking system or licensed intermediaries.
Russia is following the steps of India, which recently lifted regulatory uncertainties hounding its crypto sector by recently announcing that it will impose a 30 tax on crypto profits. While the tax is hefty compared to other jurisdictions, the move was mostly welcomed by industry players who view it as a step towards legitimizing crypto in the country.
Regulating the crypto industry instead of imposing a ban could be good for the government’s coffers. The Bell, a local Russian publication, got its hands on a government analytic note that estimated crypto tax could generate up to 1 trillion rubles or $13 billion in crypto tax annually, Cointelegraph reported.
Russian investors hold nearly $214 billion in crypto, which is around 12 percent of the global total. The report estimated that there are around 10 million users on exchanges with a significant number of crypto trades done over-the-counter (OTC). Given these figures, the analysts believe that even the most straightforward tax scheme could generate between 146 billion to 1 trillion rubles tax revenue.
