- Russia crypto bill seeks to enable cryptocurrencies to be viewed as a form of property
- The move is in line with the Russian stance to regulate virtual currencies
- If the bill is passed, cryptocurrency will be subject to taxation
Russia became the first large economy in the world to attempt to regulate virtual currency tokens. In a quite ingenious method, the legislation has decided to classify digital tokens as property leading to its protection from legal hindrances on the matters of ownership.
A New Approach
Classifying non-fiat currencies as the property is an elegant solution. This takes into account the best interests of the state as well as crypto owners. Tokens can be bound to a single person or entity by law and their transactions via exchanges or other trades can be taxed easily in a plain and straightforward way.
The new Russia Crypto bill is in line with Prime Minister Mikhail Mishustin’s earlier assurance of regulations in this sector. The bill, which was submitted to the State Duma-lower house of Parliament, while recognizing crypto as the property also laid down the taxation regime for it which included rules for declaring income from its virtual trades. It stated that any person or entity which had transactions greater than 600,000 Roubles would have to declare it in their tax forms. Failure to do so, non-compliance, or inaccurate depiction would incur a fine of 50,000 Roubles.
The Federal Tax Authority would also have powers to discern and confirm an individual’s declaration from their bank statements. The bill stated that non-payment of crypto taxes would automatically lead to the individual owning 40% of the taxed amount in addition to the original tax. The bill also clarified that cryptocurrency would not be subject to depreciation and its circulation would be exempt from VAT.
Problems In The Past
Digital tokens were simply seen as a store-of-value. Several countries in the past have tried to classify it as assets or securities. This led to major legal obstacles for people to claim ownership.
In Russia itself, for example, a district court had refused to remit back crypto assets, including bitcoin, to a certain owner who was stolen in July 2020. The loss was estimated to be more than 60 million Rubles, including a whopping 48 million Rubles in BTC alone. However, the court stated that the theft could not be considered a crime per se. This is due to the unavailability of legal status for cryptocurrency and dismissed the plea of the plaintiff.
Thus, the proposed Russia Crypto bill, if it passes, would end all legal troubles for crypto owners in Russia. Moreover, other countries may also take a page from Russia’s book and try to enact similar laws.
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