Russia Moves to Formalize Cryptocurrency Market With New Legislation

A set of bills to formalize and regulate crypto transactions was introduced to Russia’s State Duma last week. The legislation amends existing laws to allow both qualified and non-qualified investors to access digital assets while establishing reporting and tax duties for Russian residents.

Key Takeaways:

• The State Duma introduced 3 crypto bills capping non-qualified investors at $3,730 in yearly buys.
• Tax reporting on cryptocurrency transactions will be mandatory, and illegal crypto use will be punishable with fines and up to a 2-year ban.
• Cifra Markets’ Alexey Korolenko predicts an upcoming purge, with many Russian exchanges closing soon.

Russia Sets up Regulatory Infrastructure to Support Cryptocurrency Operations

Russia is advancing to bring clarity to local cryptocurrency activities happening in a gray legal zone.

The Russian government has recently introduced a series of bills to regulate and regularize cryptocurrency and digital assets activities in the State Duma. The three bills focus on defining cryptocurrency and digital financial assets, their uses as payment and investment tools, amending current laws to avoid conflicts, and defining liabilities for violating legal requirements for crypto usage.

Transactions with cryptocurrencies without regulated intermediaries are prohibited. In the same way, cryptocurrency purchases abroad are permitted, and transactions of these digital assets abroad through regulated intermediaries are also considered.

In addition, the bills establish a new limit of 300,000 rubles (nearly $3,730) per year for crypto purchases by non-qualified investors through a single intermediary after passing the Bank of Russia’s testing. Qualified investors can make limitless purchases.

Finally, residents will have to notify tax authorities of opening and closing crypto wallets abroad and report crypto transactions. Illegal use of cryptocurrency, including operating unreported exchanges with non-qualified investors, is punishable with administrative fines and disqualification from operating exchanges for up to 2 years.

According to Ria Novosti, Prime Minister Mikhail Mishustin highlighted that these regulations will create Russia’s own infrastructure for the circulation of digital currencies, allowing everyday citizens to trade and store crypto in local platforms and custody providers. He added that they will also curb anonymous and illegal crypto transactions and reduce tax evasion using digital assets.

Nonetheless, some anticipate that this new regulatory wave will bring a cleansing in the industry. Alexey Korolenko, executive director of Cifra Markets, stated that many crypto exchanges in Russia today will be unable to meet the legalization requirements and will close.