What’s Next for Crypto Mining in Russia? Leaders Discuss Taxes and Legislation

Kelvin Munene Murithi
October 17, 2024
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Russia President Vladimir Putin Approves Crypto Mining Restrictions

Highlights

  • Russia's crypto miners may soon face a two-stage tax system, exempt from VAT but not personal income tax.
  • Experimental Legal Regime (ELR) in Russia could enable crypto for international payments, amidst strategic secrecy.
  • Russia plans a national registry for crypto miners to boost transparency, targeting improved industry compliance.

Russia has been steadily moving towards full regulation of its crypto mining industry, as government officials and industry leaders met at the first forum of the Industrial Mining Association (IMA) in Moscow. 

The event, which happened on October 14, involved 70% of Russia’s crypto mining farms, showing that the country is increasingly interested in the sector. The discussions centred mainly on taxation, legal aspects of mining, and impact of crytocurrencies on cross border business transactions.

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Taxation Framework for Crypto Miners

The primary discussion point of the forum was the proposal made by the Russian Federal Tax Service (FTS) to introduce a two-tier tax system for crypto-mining companies. The recommended plan to tax miners is proposed to be implemented at two key points. 

First, miners will be expected to make a deposit once they get cryptocurrency into their wallets. In the second stage, another tax payment or deduction would be calculated on the basis of the price at which the mined coins are sold or transferred from the wallet.

FTS official Alexey Katyayev noted that there is no final decision on the issue of the taxation system. Nonetheless, crypto mining will not be taxed with Value Added Tax (VAT) since cryptocurrencies are not meant for consumption within the country. Concurrently, individual miners will still be required to pay personal income tax on their profits.

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Cross-Border Payments and Experimental Legal Regime

Another key area of discussion at the forum was the possibility of using mined cryptocurrencies for cross-border payments, especially under the Russia crypto mining’s Experimental Legal Regime (ELR). At the present moment, the Bank of Russia is developing the necessary infrastructure for the implementation of cross-border operations with the help of digital currencies. 

Nevertheless, there were different views on this matter. Some of the respondents complained that domestic production of crypto mining may not be adequate for export purposes. Some argued that instead of using cryptocurrencies, one should employ other financial digital assets designed for the international market.

Though details on the experimental regime remain scarce, it was agreed that information about the participants and trials’ results should not be made public. Anton Tkachev, Deputy Chairman of the State Duma Committee on Information Policy, noted that the anonymity of the experiment is crucial to avoid possible penalties and retain competitiveness in the Russian cryptocurrency mining sector.

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Crypto Mining Registry and Compliance

In an attempt to increase the industry’s transparency, the Russian Federal Tax Service also suggested the creation of a national register of crypto miners. To this end, miners and other companies that engage in the cryptocurrency mining business will be required to provide information such as the location of their data centers, power consumption, and origin of the mining rigs used.

Additionally, they will be required to report their cryptocurrency output and electricity usage. While much of this data will remain confidential, the registry aims to ensure greater oversight and compliance with the law.

According to Katyayev, businesses that engage in crypto mining alongside other sectors such as manufacturing, cannot claim deductions in one area to offset against earnings in the other. However, he pointed out that regulation will enhance competition in the sector through the provision of clear legal framework.

Outlook for Russia’s Crypto Mining Industry

The consensus among forum participants was that crypto mining in Russia has a bright future, especially as the government continues to develop comprehensive regulations. 

According to Igor Runets, the CEO of BitRiver, the industry will generate new opportunities in the next 1-2 years as the required facilities for energy-consuming computing like artificial intelligence are set up.

The two features that are likely to make market players list their companies on the stock exchanges include transparency and legal certainty. Timofey Semenov, CEO of Intelion Data Systems, noted that this will open up new capital opportunities for large companies, which is crucial for the further development of Russian crypto mining.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.