Russia Moves Ahead with Cryptocurrency Legislation

Deputies Anatoly Aksakov, Igor Divinsky, Oleg Nikolaev, and Senator Nikolai Zhuravlev put forward a draft law for the consideration of the State Duma. If approved, the law will determine the status of cryptocurrency mining and the order of ICO organization in Russia.

A few points on the draft law:

 - According to the bill, mining is to be considered an entrepreneurial activity if a person who conducts mining has exceeded energy consumption limits for three months in a row. The limits will be set by the government. This means cryptocurrency miners will be subject to taxation.

 - The document differentiates between cryptocurrencies and tokens. It says cryptocurrencies are a product of mining, while tokens are issued by a legal entity or an individual entrepreneur in order to attract financing.

 - The bill says only tokens can be exchanged for rubles and foreign currency. Recall that earlier a bill introduced by the Ministry of Finance said that cryptocurrencies and tokens can be exchanged for rubles, currency or other property through a special company holding a status of an operator of digital financial asset exchange. Thus, experts expect that the government will make cryptocurrency companies register on the Moscow and Saint Petersburg Exchanges, and they will be able to exchange crypto assets for rubles there. 

The Russian Association of Cryptocurrencies and Blockchain took a critical stance towards the draft law, saying that mining does not have any economic sense until crypto assets are exchanged for other assets. The cryptocurrency area cannot be regulated in the same manner as, for instance, the oil and gas industry, said representatives of the organization. 

Another draft law has been proposed by Chairman of the Russian State Duma Vyacheslav Volodin and Chairman of the State Duma Committee on Constitutional Legislation and State-Building Pavel Krasheninnikov. The purpose of the draft law is to introduce the basic concepts that will allow the regulation of the token and cryptocurrency market, as well as to create legal conditions for the effecting of transactions in the digital area.

According to the authors, the goal of the bill is to prevent the use of tokens and cryptocurrencies for the purpose of transferring assets to the unregulated territory and avoidance of foreclosure. Thus, provisions of the law will be used to settle such cases as bankruptcy, legalization of criminal proceeds and terrorism financing. 

In addition, if tokens and cryptocurrencies are classified as objects of civil rights, this will create the legal basis for the taxation system that covers these objects, as well as mining.  

Russian policy makers do not seem to favor cryptocurrencies at the moment, but this may well change with the development of the industry.