Russia and the CryptoRuble
The Russian government has finalized the Law of Cryptocurrency (also called the Bill) at the end of January 2018. It concerns the definition of all the instruments of the digital economy and determines the rights of use and exchange of such. The initial draft was presented in the end of 2017. After the amendments from last December, the Bill was ruled to enter into force 90 days after the official publication.
Inconsistent behavior and the new token
In the last several months the Russian Federation made some very contradictory statements concerning their official crypto-policy. On one hand the have the terminology explained and are on the path of introducing a state-funded operational cryptocurrency – CryptoRuble. Meanwhile, crypto tokens without transperant history are deemed illegal, but the income from digital currency is taxed by the government. The legal status of CC can’t be ignored much longer and the hope of many lays directly with the CR.
One of the goals of the new Russian policy is to minimize the illegal activities connected to digital tokens which are used in unregulated digital environment (The Dark Web).Such state offenses like terrorism-financing, human-trafficking, money laundering, drug distribution, etc. can’t be restricted from the use of encrypted technology but their income can be defined as illegal if its origin can’t be tracked down to the source.
“Citizens of Russia will be able to buy and sell cryptocurrencies and tokens only through professional participants of the securities market,” Forbes Russia explained.
This is where the CryptoRuble makes its move in the Russian economy and ensures that this new form of currency is properly tracked and it will be used only for legal purposes. The value of the new token will be reciprocal to the value of a regular ruble, so the two won’t operate very differently from one another.
The Russian Minister of Communications, Nikolay Nikiforov explained that the currency won’t be mined since it will be issued by the government, which is instantly differentiating it from other prominent CC like Bitcoin and Ethereum, which aren’t regulated by any official entity.
Regulations over the e-wallets
In accordance with the draft, an e-wallet is “a software and hardware tool that allows you to store information about digital records and provide access.” Furthermore the law states that a wallet must be “opened by the operator of exchange of digital financial assets only after passing the procedures of identification of its owner in accordance with the Federal Law of August 7, 2001.”
Mining granted by the Bill
Mining for tokens, was defined as “an entrepreneurial activity aimed at creating a cryptocurrency and / or validation in order to receive compensation in the form of a cryptocurrency.” All mining activities automatically become “legally valid” actions.
On July 18 2018 it was announced that Russian cryptocurrency miners and holders will be monitored under the control of the Internal Revenue Code. For now the Bill won’t include a new form of taxation for cryptocurrency owners and miners, which means that the mining and circulation of tokens will be charged according to the Russian Tax Code. A personal income tax will be paid by the individuals who trade with CryptoRubles, while the corporative companies will have to pay taxes in accordance with their type of businesses. If deemed necessary by the officials, a separate taxation schemes for mining and circulation of cryptocurrencies may appear in the future.
The vision of Putin
Vladimir Putin is actively involved into leading Russian economy to a new path where legitimate businesses can operate in the Federation in whatever currency they like as long as that business is transparent. This way he is laying the foundations of the “single payment space” within the Eurasian Economic Union which consist of: Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
It is natural for countries like these to experience a certain amount of dollarophobia (fear of the U.S. currency) and try to establish their own way to monetize businesses which come directly from the Union. The CryptoRuble provides such means by which to operate and even convert tokens back into national ‘fiat’ currency to pay bills, taxes or else, and it is done transaction-cost-free. This is very different from the way Bitcoin is operated though, since it is a cryptocurrency which is double – taxed: once is charged the buyer and next time is charged the receiver of the same BTC transaction when he\they decide to spend the tokens somewhere.
Written by: Lyubomir S. Evtimov