During his recent address at the Moscow Economic Forum, Russian President Vladimir Putin asserted that cryptocurrencies cannot be completely banned. This statement underscores the growing recognition of digital assets as a significant component of the global economy.
Speaking at the VTB Investment Forum “Russia Calling!” on December 4, 2024, Putin emphasized:
“For example, who can ban Bitcoin? No one. And who can prohibit the use of other electronic payment methods? No one either! Because these are new technologies.”
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Highlights of Putin’s Statement
- Inevitability of Development: Putin emphasized that the development of cryptocurrencies is an inevitable process that will continue regardless of the situation with the dollar.
- Technological Advancement: The President highlighted that cryptocurrencies are based on new technologies, which cannot be banned.
- Economic Advantages: According to Putin, the growth of cryptocurrencies is driven by the desire to reduce costs and enhance the reliability of financial transactions.
Putin noted that cryptocurrencies have unique characteristics that make them resistant to bans. He emphasized that despite attempts by certain countries to restrict the use of digital currencies, their popularity continues to grow. The President also pointed to the need for a clear regulatory framework for cryptocurrencies to ensure investor protection and mitigate financial risks.
The Latest Regulatory Changes for Cryptocurrencies in Russia
On August 8, 2024, Vladimir Putin signed a law classifying digital currencies as a form of property for use in cross-border trade settlements. Effective September 1, 2024, cross-border transactions and digital currency trading on exchanges are permitted under experimental legal regimes (ELRs). This represents a significant step in developing the legal framework for cryptocurrencies in Russia, potentially transforming the country’s approach to international financial operations.
Under the new legislation, digital currencies are now recognized as property, allowing their use for transactions between residents and non-residents. This decision reflects the growing interest in cryptocurrencies and the need to adapt legal frameworks to contemporary economic realities.
On November 29, 2024, Putin signed another law recognizing digital currencies as property and establishing taxation rules for cryptocurrency operations.
Key Provisions of the Law
- Status of Digital Currency: Cryptocurrencies are recognized as property, including when used for cross-border settlements.
- Taxation of Cryptocurrency Operations:
- Transactions involving digital currencies are exempt from VAT.
- Income from cryptocurrency operations is treated similarly to income from securities transactions.
- Tax Rates:
- Personal Income Tax (PIT): 13% for annual income up to RUB 2.4 million, 15% for income exceeding this amount.
- Corporate Profit Tax: 25% starting in 2025.
- Cryptocurrency Mining:
- Income from mining is considered as received in-kind.
- Mining expenses, including equipment and electricity costs, can be deducted when calculating the tax base.
- Obligations of Mining Infrastructure Operators:
- Required to report information on individuals using their infrastructure for mining to tax authorities.
- A penalty of RUB 40,000 applies for late reporting.
- Additional Provisions
- The law introduces the concept of a “market quotation” for digital currencies, which will be used to calculate the tax base.
- Special conditions are outlined for cryptocurrency transactions conducted under ELRs in the field of digital innovation.
These laws mark a significant milestone in regulating the cryptocurrency market in Russia by establishing clear taxation rules and formally integrating digital currencies into the legal framework. Companies can now legally conduct transactions with digital assets, creating new opportunities for businesses. This development is also expected to attract foreign investments and foster technological advancements in the country.
Experts believe that Putin’s stance will enhance Russia’s reputation as a nation open to innovation and technological progress.
