How is the activity of blockchain platforms controlled, the extraction of digital assets, as well as answers to other questions about the Russian legislative framework related to digital assets
With the entry into force of the law “On Digital and Financial Assets” from January 1, 2021, the situation on the crypto market from the point of view of regulation has become more transparent. In particular, the law defined digital assets as property, and the owners of cryptocurrencies received guarantees of rights in the case of declaring assets. Despite this, many aspects of the crypto industry in Russia still have an uncertain status and are in a gray zone.
For example, there is no clear answer to the question of what a cryptocurrency is in the CFA law. There is no concept of “cryptocurrency” in the law, but only “digital financial assets” and “digital currency”. Although within the framework of current legal practice, these concepts are identical, the absence of the word cryptocurrency creates additional confusion.
The digital currency in the law is defined in a complex formulation as “a set of electronic data (digital code or designation) contained in an information system that is offered and (or) can be accepted as a means of payment…or by an international monetary or settlement unit, and (or) as an investment” (Article 1). At the same time, residents of the Russian Federation are not allowed to receive digital currency as payment for goods, works or services (Article 14).
The CFA Law regulates the taxation of cryptocurrencies and promises Russians protection of their property rights to cryptocurrency only when it is declared. In the case of receiving income from the sale of digital assets, the tax base will be calculated as the difference between their purchase and sale prices.
How to pay a tax on cryptocurrency in Russia. Step-by-step instructions
Due to gaps in regulation, a number of problems arise, which are regularly paid attention to, including representatives of law enforcement agencies. In December 2020, Alexander Bastrykin proposed to recognize the cryptocurrency as property. The head of the Investigative Committee noted that this ” is a necessary condition for the investigation of criminal cases in which the digital currency is, for example, the subject of a bribe or theft.”
Activities of blockchain platforms
According to the current version of the CFA law, all transactions with digital financial assets “are made through the digital financial asset exchange operator”. The operators of such transactions can be “credit organizations, trade organizers, as well as other legal entities” entered in a special register.
At the moment, the Russian authorities still have not come to a single conclusion about the status of cryptocurrencies. A year has passed since the adoption of the law, but there are still no participants in the CFA register. In the spring of this year, the Russian Union of Industrialists and Entrepreneurs (RSPP) drew the attention of the Ministry of Finance and the Bank of Russia to this problem and asked to speed up the formation of the register. In fact, there is still no legal entity in the Russian Federation that can legally issue digital assets.
At the moment, Russia has lost in the volume of bitcoin hashrate to Kazakhstan, remains in the top five largest countries in the world by this indicator. According to the Cambridge Center for Alternative Finance, in July of this year, Russia’s share was 6.8%.
At the same time, the concept of mining in the Russian Federation is not regulated in any way, and it is not mentioned in the CFA law. There is a law enforcement practice in relation to mining only in matters of illegal use of electricity and in the case of property conflicts between miners.