Russian Government to Control Bitcoin to Fiat Exchange Operations

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13.04.2018

The Russian government has prepared a memo on the law “On digital financial assets” that states the “exchange of cryptocurrencies for fiat money to the amount of 600,000 rubles (around $10,000) and more has to be subject to mandatory currency control,” Russian publication Izvestiya reports.

Russian banks, however, have been monitoring such transactions as part of their AML measures. The government also believes that profits from digital asset transactions have to be taxed. The bill was submitted by a group of parliament members along with the head of the parliament’s committee for financial markets Anatoli Aksakov. Mr. Aksakov told Izvestiya that the government has supported the bill, however, the memo hasn’t yet been received.

The bill also stipulates that cryptocurrency exchange operators will have to comply with all existing AML requirements. If it fails to do so, it may lose its license.

According to Yuri Pripachkin, the president of Russia’s association for cryptocurrencies and blockchain, the current revision of the bill allows only for cryptocurrency transactions, so they all can be subject to the standard banking and the Financial Monitoring Service control.

He also noted that such approach will force local miners to look for other jurisdictions in order to exchange the mined coins for fiat. At the same time, the government’s memo doesn’t specify which tax is applicable in this case, and whether miners will have to register a legal entity to continue their operation.

According to Teimuraz Vashakmadze, the associate dean at RANHiGS, the standard 13% personal income tax might be applied to “cryptocurrency speculators who buy currency cheap and sell it for more,” however, he notes, the tax authorities will face hard time enforcing such a law.

Mr. Vashakmadze also noted that buying and selling cryptocurrencies is in fact anonymous, so “unless someone claims they have bought and sold bitcoins, nobody will know that, so lots of people won’t just make a voluntary statement in this respect.”

The move follows Russia’s Ministry of Telecom and Mass Communications’ (MinComSvyaz) publication of controversial guidelines for Initial Coin Offerings (ICOs) earlier this month.

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