Russia looks to implement crypto taxation and mining policy changes
A number of reports published by local Russian media in recent days suggest that the Russian authorities are implementing taxation and regional controls on cryptocurrency mining.
Regional mining ban
A report published by the Moscow Times on Nov. 19 suggests that Russia’s Deputy Prime Minister, Alexander Novak, has led a government commission that plans to implement a ban on cryptocurrency mining in specific Russian regions.
The authorities have been motivated in enacting such a ban in order to combat power shortages. With that, a ban is being implemented on a temporary basis during the heating season. The restrictions will apply to miners located within six regions within the North Caucasus, as well as the Zabaikalsky region in Siberia and territories now controlled by Russia in Ukraine.
The ban will apply from December through to mid-March 2025, with this seasonal restriction to be applied subsequently each winter until 2031.
Back in August, Russian President Vladimir Putin signed into law legislation which legitimized cryptocurrency mining within the Russian Federation. That law recognized mining activities and the concepts of mining pools and mining infrastructure operators.
The legislation requires mining operators to register with the government. Individual miners can mine without registering so long as they stay within specified energy-use limits. Earlier this month, the authorities set a power consumption limit of 6,000 kWh per month for those unregistered miners.
The legislation also recognized the ability of stakeholders to trade in foreign digital assets on Russian blockchain platforms, with Russia’s central bank, the Bank of Russia, retaining the ability to ban specific digital assets from being traded if such trading is deemed to be a threat to Russia’s financial stability.
15% tax proposal
Earlier this week Russia’s Interfax news agency reported that the Russian government had approved draft amendments to a bill concerned with the purchase and sale of digital currencies relative to crypto mining activity.
According to those proposed legislative amendments, digital assets will be classified as property from a taxation perspective. Income derived from mining activities will be assessed in terms of taxation based on market value at the time of receipt of the asset.
The legislative amendments propose a 15% tax rate for cryptocurrencies. Furthermore, crypto transactions will not be subjected to value-added tax (VAT). However, income derived from such transactions will be taxable in the same way as income from transactions involving securities. Crypto mining operators will be permitted to deduct operating expenses from their taxable income.
Russia’s Finance Ministry is understood to have clarified that the taxation approach would strike a balance between Russian government interests and those of commercial operators.
With the introduction of legislation to recognize cryptocurrency mining activity earlier this year, Ki Young Ju, CEO of on-chain and market data analytics firm CryptoQuant, noted the country’s growing involvement and national-level engagement with digital assets. The coming months will determine if these latest crypto mining restrictions will dampen the level of involvement of Russia-based crypto miners.
