The November 29, 2024Vladimir Putin signed a historic law, under discussion for some time now, officially recognizing cryptocurrencies as property in Russia. With this text, Moscow adopts a clear and ambitious position: integrate cryptocurrencies into its economic and fiscal framework. An announcement that could well resonate on the international scene.
But what does this mean in practice for users, miners and businesses? And why could this decision be a game-changer for cryptocurrencies globally? Decryption.
- Vladimir Putin signed a historic law officially recognizing cryptocurrencies as property in Russia, a shock that could change the world situation.
- The new legislation allows the use of cryptocurrencies for cross-border payments and provides significant tax benefits, ushering in a new economic era in Russia.
Cryptocurrencies in Russia: Official recognition
Something had been brewing on the Russian side for a few weeks. Particularly in terms of cryptocurrencies since the Russian Federation is seeking to regulate cryptocurrencies.
In detail therefore, the new law, signed by Vladimir Putin, places the cryptocurrencies to the rank of legal ownershippaving the way for their use in international business transactions. A strategic decision in a context where Russia seeks to reduce its dependence on the traditional financial system, dominated by the dollar.
Concretely, here is what changes (spoiler, no surprise here, the texts had been under discussion for a very long time for some):
- Cryptocurrencies can be used as a means of cross-border payment in an experimental setting.
- A VAT exemption is granted for activities related to the extraction and sale of cryptocurrencies.
- Organizations facilitating these transactions will also not pay VAT.
A strict but attractive tax framework
Concerning crypto taxation in Russia, for individuals, cryptocurrencies from mining will be considered as income in kindcalculated according to their market value.
Progressive taxation therefore applies. It will be:
- 13 % for income up to 2.4 million rubles.
- 15 % beyond this amount.
Minors will be able to deduct their operating expensesa boost that could encourage activity.
Companies engaged in cryptocurrency mining will be taxed at a standard rate of 25 % from 2025.
Mining infrastructure operators will have to declare their users to the tax authorities. In case of non-compliance, a fine of 40 000 roubles is planned. Again, no surprises as we explain in this article.
Cryptocurrencies to counter international sanctions
This decision marks the culmination of a long-term strategy aimed at circumventing the dominance of the US dollar and mitigating the impact of Western sanctions.
Indeed, for several years, Russia has been working to reduce its dependence on the dollar, in particular by strengthening its trade relations with partners such as China and by exploring monetary alternatives. The adoption of cryptocurrencies for cross-border payments is part of this, providing a route to transact internationally without relying on the traditional dollar-dominated financial system.
In July 2024, the Russian Parliament had already adopted laws legalizing the mining of cryptocurrencies and allowing their use for international payments, under certain conditions and with the approval of the Central Bank. These measures aimed to facilitate trade by circumventing the restrictions imposed by international sanctions.
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