Russia's finance Ministry is considering introducing taxes on crypto mining. (Photo by Manuel Medir/Getty Images)
Key Takeaways
- Russia plans to impose a tax on crypto mining amid a boom in the industry post-legalization.
- The Deputy Finance minister said the long-term goal is taxing mining profits.
- Russia plans to pass crypto mining regulations during the ongoing autumn parliamentary session.
After legalizing mining and crypto transactions, Russia is now moving to exert greater control over its burgeoning crypto mining industry.
The Finance Ministry is preparing to implement taxes on profits earned by mining operations in a bid to reap fiscal benefits from this expanding sector.
Russian Finance Ministry Eyes Tax on Electricity Consumption
According to reports published by the state media, the Finance Ministry is considering introducing taxes on the crypto mining industry, which could begin with an excise tax on electricity consumption.
Russian Deputy Finance Minister Ivan Chebeskov said the long-term goal is taxing profits.
However, in the meantime, the government also plans to impose a tax on electricity consumption. The deputy minister clarified that these are just proposals; no final decision has been made yet.
Talking about the difference between the excise tax on electricity and taxing the profits, the Deputy Minister said:
“In principle, it is easier to measure electricity consumption than to calculate the cost of bitcoins received in a wallet. Because wallets can be different: some wallets can be declared, while miners may not declare some wallets, that is, this is more of an administrative issue.”
Should Russia move with the decision to tax the crypto mining industry, it could introduce the legislation during the upcoming autumn session.
Thawing Towards the Crypto Industry
While Russia maintained a key position in the crypto mining industry even before the approval, it was still a gray area that was not protected under Russian law.
With Putin’s stamp of approval, Russia has turned to legalizing crypto use beyond mining.
The Russian government is currently testing crypto payments for cross-border transactions and settlements, which include trade for military goods. The decision to turn to crypto came amid growing sanctions and limitations to trade in the international market.
Russian authorities have reportedly formed focus groups comprising some key industry players based on their company size and the difficulties they face in carrying out trade. Russia hopes to leverage crypto payments to bypass international sanctions while ensuring that the use of crypto won’t threaten the country’s financial sovereignty.
Russia’s crypto adoption has come despite continuous warnings from the central bank , which has long called for a blanket ban on crypto-centered activities.
The central bank warned that a surge in crypto assets in the country could undermine the stability of Ruble.
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