Russia’s Ministry of Finance proposes harsher taxation rules for cryptocurrency users

Russia’s Ministry of Finance has drafted a bill with harsh penalties for anyone who does not report their cryptocurrency holdings above a certain level.

The Ministry of Finance of the Russian Federation proposes to amend the wording of the law on the regulation of cryptocurrencies, which will enter into force on January 1, 2021. In particular, the Ministry proposes to tighten control over cryptocurrency exchanges and oblige them to report to the tax authorities on the transactions of digital assets by their users.

If amendments to the law are adopted by the government, quite a large part of crypto investors will be targeted by government agencies. In the latter version of the amendments, the Ministry of Finance proposes to introduce an obligation to declare the digital currency to the amount of more than 100 000 russian rubles ($1278).

Investor or trader with such turnover is obliged to report to tax authorities by registering his cryptocurrency wallets. He should also submit an annual report on transactions with such assets and tell about the amount of coins he has left. Naturally, all this creates risks of fines for the omission of data in the future. And since traders sometimes make dozens of transactions within a day, it will be very difficult to keep records of all transactions throughout the year. Even if the exchanges will help with this, the traders’ “extra work” will seriously add up. Sanctions for failure to comply with the requirements — a fine of 30% of crypto assets, but not less than 50 000 russian rubles.

More severe penalties are foreseen for those who do not declare a crypto wallet with an annual turnover of over one million rubles. In this case, the case may end in imprisonment with a penalty of up to three years.

At the moment in Russia there are no clear rules for the regulation of cryptocurrencies. However, the recommendations of the Financial Action Task Force on Money Laundering (FATF) imply either control of trafficking or a complete ban on cryptocurrencies. The Ministry of Finance is considering both options.

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Jeffrey Hancock

Blockchain enthusiast developer and writer. I love video games, blockchain and the hot symbiosis of these two worlds.