Amid ongoing debates surrounding the regulation of Russia’s crypto industry, a notable revelation has emerged, the country’s tax administration will be entrusted with the responsibility of overseeing this sector.
A senior government official has indicated that the Federal Tax Service (FTS) will assume the pivotal role of the primary regulator for cryptocurrencies, serving as both the gatekeeper for market participants and the watchdog for compliance.
This article explores the current regulatory concept being discussed, focusing on the importance of individuals and businesses reporting their cryptocurrency assets and transactions to the tax service.
Stepping into the Spotlight: The Federal Tax Service
During a recent interview with Izvestia, Deputy Finance Minister Alexey Moiseev disclosed that the FTS is poised to become the authoritative regulatory body for Russia’s crypto industry. A draft legislation is being prepared to establish regulatory rules for the sector, the government contemplates the creation of a specialized state body to oversee the bustling crypto market.
Moiseev clarified that, as outlined in their concept, the supervisory agency will shoulder the responsibility of accepting declarations from individuals and organizations about their crypto wallets and transactions. Drawing a parallel to the prevailing practice of reporting foreign accounts, Moiseev asserted that it is only logical for the FTS to also assert its regulatory power over cryptocurrencies.
Reporting Duties for Individuals and Entities
Under the proposed regulatory framework, both private individuals and legal entities in Russia will enjoy the freedom to engage in various crypto activities, encompassing mining, selling, and holding cryptocurrencies for investment purposes.
However, it is essential to note that all these transactions will be subject to meticulous reporting requirements, with resulting incomes subjected to appropriate taxation. Moiseev underscored that vital information regarding crypto wallets and transactions will be shared with three key institutions: the Federal Tax Service, Rosfinmonitoring (Russia’s financial watchdog), and the Central Bank of Russia.
Moiseev emphasized that, apart from banks, the primary interface for reporting and compliance will undoubtedly be the Federal Tax Service. He elucidated that the FTS will function as a gateway for citizens’ declarations, mirroring its current role in managing foreign bank accounts. This consolidation of reporting obligations aims to streamline the regulatory process and ensure effective oversight of crypto activities.
Russia’s Journey Towards Crypto Regulation
Recent years have witnessed Russia grappling with a barrage of Western sanctions and financial constraints as a consequence of its involvement in Ukraine. In response, the country has intensified its efforts to legalize select crypto-related activities, including mining and the utilization of cryptocurrencies for international settlements.
Currently, four crypto-related laws are undergoing thorough review in the State Duma, the lower house of the Russian parliament. Anatoly Aksakov, the head of the Financial Market Committee, has expressed unwavering optimism, anticipating the adoption of these laws by the end of July.
Russia forges ahead with its determined plan to regulate the burgeoning crypto industry, with the Federal Tax Service poised to take center stage as the primary regulator. The proposed regulations will mandate individuals and entities to dutifully report their crypto holdings and transactions, thereby ensuring compliance and the appropriate taxation of crypto-derived income. By consolidating reporting obligations under the purview of the Federal Tax Service, Russia aims to establish a robust framework for overseeing the crypto sector, bringing it in line with international standards