Russian Duma’s working group to address gaps in crypto regulation

abdelaziz Fathi

A working group formed by the Russian State Duma to tackle the issues of cryptocurrency regulations is set to hold its first meetings, said the head of the parliamentary Financial Market Committee, Anatoly Aksakov.

Russia

Duma Speaker Vyacheslav Volodin instructed the legislature to create a group that will see participation from outside the government bodies and the lower house of parliament. The overarching goal of the group seeks to address regulatory gaps in the industry, including the taxation of bitcoin mining, especially by miners who use cheap electricity.

Volodin pointed out that the working group doesn’t aim to prohibit the cryptocurrency, since “it is a virtual reality”. Instead, it seeks to completely legalize the virtual asset class to be subsequently controlled.

The impetus for the regulation of crypto mining is driven by mounting concerns that Russia has become a major destination for crypto miners after China’s recent crackdown.

Russian President Vladimir Putin said earlier that cryptocurrencies have a “potential future” as a means of payment. The Russian leader pointed out that crypto money finds more real-world use cases. However, Putin was less sure about the fundamentals that were driving the valuations of cryptocurrencies like Bitcoin, which is trading at a price of upwards of $57,000.

To insulate the Russian economy from Western sanctions, the Kremlin has been trying to reduce the dependence on the U.S. dollar in the country’s foreign trade. Despite being a long-term priority, Putin said Russia will be forced to rely on the greenback for some time, adding that he’s not convinced that Bitcoin can replace the buck in settling oil trades.

Russia orders public officials to declare crypto assets

Earlier in August, Putin approved the National Plan for Countering Corruption for 2021–2024, which proposed inspections of officials who are obliged to disclose their digital assets and currency. Russian officials, as well as their spouses and children, are required to report their crypto holdings to the tax authority if the total transaction amount exceeds RUB 600,000 in a calendar year.

Before that, the Russian government asked public officials who own or trade cryptocurrencies to disclose their holdings, and the first reporting deadline was June 30, 2021.

According to an order signed by Putin, Russian public officials who were required to report their cryptocurrency holdings will have their disclosures audited by the central bank and other authorities.

Within this context, Putin has instructed the Bank of Russia to cooperate with the ministries of finance and labor to propose crypto-asset inspections.

Failing to disclose data or deliberately providing false information is a criminal offence. Penalties for unreported crypto transactions include a jail term of up to three years and a fine ranging from 500,000 rubles to 2 million rubles.

In an effort to foster regulatory clarity in the Russian cryptosphere, the central bank has proposed fresh guidelines to govern market participants and floated the idea of a digital ruble.

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