The Bank of Russia said it will allow cryptocurrency mining in the country, given tax, control, and reporting considerations. However, the central bank also proposes for crypto miners to sell their coins overseas, which will still oblige them to pay taxes.
Bank of Russia Allows Mining
The Russian central bank has offered to allow the mining of cryptocurrencies in Russia, but proposes that the miners must sell their coins outside of the country, RBC reported on Thursday.
At the Bank of Russia’s annual meeting with bankers, the central bank’s first deputy chairman, Olga Skorobogatova, explained:
We offer to allow mining within the territory of the Russian Federation. For us, it is a kind of activity that can be supported…At the same time, the question of how the miners will exchange what they have mined is still debatable. We, as the Bank of Russia, believe that they still have to do this outside the territory of Russia.
The first deputy chairman said that the bank’s stance to allow mining in the country is “from the point of view of taxation and from the point of view of control and reporting forms.”
Last week, the Ministry of Finance published a draft law “On Digital Financial Assets” which allows citizens to buy and sell cryptocurrencies and tokens through licensed trading platforms, brokers, and dealers.
Miners Will Still Be Taxed
Roman Buzko, a partner at Buzko & Partners law firm, told the news outlet that selling cryptocurrencies outside of Russia will not save miners from having to pay taxes. He detailed:
Miners, if they are obliged to sell outside of Russia, will receive currency from the sale of the cryptocurrency. As a result, if the legal entity of the miner is located within the territory of Russia, it will convert its foreign exchange earnings into rubles, as it happens, for example, in the case of oil sales, and from these incomes will pay taxes. So, from the point of view of taxes, the state will not lose.
He added that “It seems to me that the whole policy of the central bank with respect to cryptocurrencies is aimed at protecting consumers from unreasonable risks, which they do not understand.”
The Ministry of Communications and Mass Media has been developing a bill for the regulation of cryptocurrency mining in Russia. This week, the ministry revealed that a system is in the works to detect crypto miners. It also proposes giving them energy quotas, special tariffs, as well as a 2-year tax holiday for declaring cryptocurrency-related income.
What do you think of the central bank’s proposal? Let us know in the comments section below.
Images courtesy of Shutterstock and the Bank of Russia.