Cryptocurrency in Russia: Legislation Amendments
Cryptocurrency isn't a new thing, yet it becomes increasingly popular for earning money. Although its legal status is still undefined, this does not prevent states from imposing a tax on cryptocurrency in 2021.
There was a huge loophole in Russian legislation that prevented the tax inspectorate from getting involved with those who trade Bitcoins. The situation is changing now, as a new law has been urgently passed.
What are cryptocurrency and digital assets?
At the end of 2020, a new Federal Law No. 259, "On Digital Financial Assets, Digital Currency and Amendments to Certain Legislative Acts of the Russian Federation" ("DFA Law"). This regulatory document entered into force on January 1, 2021.
This cryptocurrency law introduced two terms:
- Cryptocurrency. This includes BTC (Bitcoins), ETH (Etherium), and all other blockchain-based digital coins with no obligor in principle. For purposes of bankruptcy law application, any such digital currency would be considered property.
- DFAs (Digital financial assets). These are a variety of digital rights, including monetary claims, the ability to exercise rights to issue securities, and rights to participate in the capital of a non-public JSC. It is essential to note the main difference between digital financial assets and digital currency is an issuer's presence, i.e., a particular person responsible for all obligations to the owners.
Now it is possible to issue CFA only through special operators listed in a separate register of the Central Bank of the Russian Federation.
Simultaneously, there will be no point in issuing digital financial assets in Russia shortly since it will be challenging to find buyers and the market cannot boast of liquidity.
Therefore, when they talk about the law on cryptocurrency, as a rule, they mean digital currency and do not consider CFA.