Russia Plans on Recognizing Crypto Mining as a “Type of Entrepreneurship”

Key takeaways:

• Russia adopted its first cryptocurrency-related regulation in 2020 and introduced additional changes earlier this year 
• The country is now considering regulating cryptocurrency mining and introducing specific taxation rules
• Ukraine hopes that the new digital currency and banking rules will attract foreign crypto companies to set up shop within the country

On Wednesday, Anatoly Aksakov, chairman of the State Duma Financial Committee, told the press that Russia is seriously considering recognizing crypto mining as a type of business. If lawmakers introduce new legislation, crypto mining would be treated like any other legitimate business under Russian law.

Russia introduced its first crypto regulations in July 2020

On July 31, 2020, President Vladimir Putin signed Federal Law on Digital Financial Assets and Digital Currencies, which was the first piece of legislation that was passed with the specific intention of regulating the growing crypto sector in the country. The law includes rules on the issuance of new digital currencies as well as rules describing how to record transactions and the circulation of crypto assets.

Following the initial legislation, the provisions added to the Russian tax code earlier this year, official cryptocurrency definitions, and corresponding tax regulations were approved by the state’s parliament. Per the new reporting rules, Russian residents are required to report crypto transactions if their cumulative amount exceeds $7,800 per year.

Now, Russia intends to regulate the crypto mining industry as well. According to Aksakov, Russia is planning to tax the industry and impose restrictions, or rather guidelines, on how to conduct mining operations within the country’s borders.

“As this [cryptocurrency mining] is a type of entrepreneurial activity, it is obviously necessary to include it into the state register, to regulate it as a type of entrepreneurship under an appropriate code, and impose relevant taxation.” - Anatoly Aksakov, chairman of the Financial Market Committee

At the moment, there are no concrete legislative amendment proposals being made for regulating mining, only vague statements coming from the officials of the State Duma.

Ukraine passes cryptocurrency regulation, hopes it will attract foreign crypto businesses

Ukraine is another Eastern European country that is currently undergoing the process of updating its legislative framework in order to regulate the cryptocurrency sector. The country’s Ministry of Digital Transformation will supervise the implementation of the new rules that the Ukrainian Parliament adopted on Wednesday. 

The new law will allow crypto businesses to set up shop within the country’s borders and enable banks to service their accounts. Additionally, the new legislation will give residents of Ukraine the ability to declare their income in digital currencies.

“It will become a powerful incentive for the further development of the crypto-sphere in Ukraine. Banks will open accounts for them and conduct transactions with a new class of assets. I am sure that society, business and the state will benefit from the legalization of the new sector of the economy.” - Oleksandr Bornyakov, deputy minister of Digital Transformation of Ukraine

Ukraine hopes that legitimizing the business operation of crypto companies will attract foreign firms to move to the country. “The country will receive additional tax revenues to the budget,” explained Anastasia Bratko of the Ministry, “which will be paid by crypto companies,” she concluded.

Ukraine joins the growing list of countries that have decided to draft laws intended to pull the crypto sector away from a legal gray zone. For instance, Cuba recently said it will recognize cryptocurrencies as a form of payment. Yesterday, Panama unveiled a bill to recognize Bitcoin as a national currency.

Earlier in the week, El Salvador made history by becoming the first country to recognize Bitcoin as legal tender.