In a landmark move for cryptocurrency regulation, Russia has officially recognized digital currencies as property. The new law, published on Nov. 29, imposes taxes on cryptocurrency activities and sets a broad framework for their regulation.
Crypto Sales Taxed Under Progressive Rates
Under the new law, revenues from cryptocurrency sales are now subject to personal income tax ranging between 13% and 15%, depending on income levels. However, mining operations are exempt from value-added tax, hence a plus for miners in the country.
Mandatory Reporting for Mining Operations
Mining infrastructure operators must report service details to local authorities. Failure to comply with the law will be punishable by fines of up to 40,000 rubles (around $383). The step is the latest attempt to increase the regulation and transparency of the growing crypto sector.
Crypto Declared a Form of Legal Property
The legislation classifies digital currencies as property, granting them legal status in Russia. This includes cryptocurrencies used in foreign trade agreements under Russia’s experimental legal crypto regime. The classification ensures that cryptocurrencies are protected and regulated under Russian law.
Mining Income Taxed with Deductions
Income from mining is considered “income in kind,” and its value is determined with regard to market rates. Taxation is progressive: 13% if the income does not exceed 2.4 million rubles and 15% if the income exceeds the threshold. Expenses connected with mining are deductible for tax purposes, thus decreasing the financial load on miners. Corporate profits derived from mining activities will be taxed too, and the rate is supposed to grow to 25% in 2025.
Restrictions on Tax Regimes
The law prohibits the application of simplified and special tax regimes, such as the patent system or automated simplified taxation, to organizations and individual entrepreneurs involved in the activity of mining or sale of cryptocurrencies. Such actions aim to equalize tax payments in the market.
Legal Framework for Mining
On Aug. 8, 2024, President Vladimir Putin signed the law regulating cryptocurrency mining that comes into effect on Nov. 1, 2024. The law stipulates that only registered Russian companies and individual entrepreneurs are allowed to mine cryptocurrencies, with a limit of 6,000 kWh per month. Energy concerns also limit several regions further.
Surging Interest in Cryptocurrencies
Interest in cryptocurrencies is growing with increased clarity in the regulatory environment. In November alone, major crypto exchanges in Russia saw traffic surge by more than 8%, indicating increased demand fueled by the new legal framework.
This development underlines Russia’s growing focus on regulating the cryptocurrency sector while fostering its integration into the mainstream economy.
