Russia always has a unique approach when it comes to managing crypto investments. The Russian central bank had recently announced a ban on crypto payments. This surprised many investors. However, the fair part included taking care of crypto investors’ interests. The central bank had clarified that the bank is likely on crypto payments only and investors are secured with their transactions. Russia takes the third position in the global market for crypto investments.If you’re thinking about getting into bitcoin trading, consider the following elements that influence the Investing in Bitcoins.
After this milestone, Russia is not coming out with another news for its residents. Russia is working on a policy to govern cryptocurrencies. This new law will allow the government to monitor crypto transactions. Going by reports, it is understood that Russia is planning to consider cryptocurrencies as foreign currency and rules shall apply as applicable. There shall be restrictions on using cryptos for day-to-day transaction purposes.
Now that cryptocurrency will take the role of foreign currency, this can no longer be used for any transaction purposes.
The terms transaction and payments have been used interchangeably. To make it better, let us understand the key difference between both these terms.
The policy as developed by government authorities aims at fulfilling and protecting customer interests. Any agency or crypto exchange likely to deal with crypto transactions needs to declare themselves with the Russian government. The said entity needs to go through a rigorous license application process including a declaration of liquidity funds and capital. This step is taken to ensure that Russian residents are protected from any malpractices and interests taken care of. This way only registered exchanges can operate in Russia. The government also clarified that these steps will curb the use of cryptocurrencies for money laundering and other illegal activities.
Another notable point in this approach is the effort required to convert these foreign currencies. To undertake any day-to-day transactions this currency will need to be converted to local currency. Even if Bitcoin or other cryptos take legal stature the chances of these coins being used to make payments are minimal. Another catch here is the declaration of crypto transactions. In case a transaction exceeds 600,000 rubles then such transactions need to be brought forward to a government notice. Failing to declare investment may attract a penalty.
In the interest of investors and residents
The new crypto law is aimed to protect its residents from any unlawful practices using cryptocurrencies. The government aims at bringing transparency at every level thereby reducing risks and threats to the economy. With this step, there shall be a considerable reduction in fraud cases. But, one thing that the draft has not clarified or explored is the treatment model for existing investors. These laws and policies are applicable for any new investment in the country. Another flaw also calls out on steps required to control the demand and supply of cryptocurrencies in the market.
All registered entities in Russia need to strictly make use of a new technology called a transparent blockchain. This is an artificial intelligence tool. It allows tracing users and tagging every blockchain against the actual investor. While this move entirely kills the concept of cryptos, it also helps investors from hacking and other threats.
Size and scale of Russia’s crypto investment
Russia and its citizens fancy crypto investments. Russia takes the third position in overall global investment. It is estimated that crypto investments in Russia range from 12-15 million wallets. The total market capitalization adds to $25-30 billion. While crypto is not considered as real money there are high possibilities that the government gain from taxable income. Any transaction that involves anything above 500,000 rubles falls under the government radar. These transactions are tracked and records maintained as necessary.
Along with cryptocurrency, there has been a growing interest in non-fungible tokens as well.
With the volume of investments and revised rules, it is evident that the Russian government will reap benefits in the coming years. Investments shall be multi-fold and it will create direct income to the government through the tax model.
This step will also help to identify crypto miners in Russia. In addition to taxable income, the government can also levy additional taxes on these miners. Russia has faced power failure and network connectivity as an ongoing issue. The Government has also clarified steps are being taken to eliminate such disturbances.