Blockchain

Russia’s Tax Authorities Recognize Bitcoin and Other Cryptocurrencies

The uncertainties surrounding the use of Bitcoin and other cryptocurrencies have been laid to rest. In a document released on Nov. 29, 2016, Russia’s federal tax service has finally taken a position concerning the legality of Bitcoin use and transactions. The document emphatically stated that there is no legal prohibition of cryptocurrencies.  

Three years of uncertainty

For almost three years the Russian authorities could not make up their mind whether to ban or accept Bitcoin and introduce penalties. Somewhere along the line, the ministry of finance suggested the introduction of four years imprisonment for the use of Bitcoin.

Even bank officials who dealt in Bitcoin were to be sentenced to seven years in prison and banned from holding certain positions at a financial institution. However, the authorities rescinded their decision and gave the ministry of finance a new directive to redraft a new law concerning Bitcoin.

Bitcoin as foreign currency

The federal tax service’s document authorizing the legality of Bitcoin indicated that all trading operations concerning Bitcoin and any other cryptocurrency are to be considered as foreign or external securities. In fact, this essentially makes the buying and selling of Bitcoin and other cryptocurrencies a monetary transaction.

Money laundering and terrorism concerns

However, the statement also indicated that Russian authorities could investigate anyone using Bitcoin for money laundering and terrorism. Whether this calls for KYC and AML from exchanges is yet to be clarified by the government as there are more interpretations that are yet to be released. From all indications, the directives look unclear. 


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