Putin Signs Landmark Law Designating Digital Currencies as Property, Paving Way for Crypto Regulation in Russia

In a groundbreaking move Russian President Vladimir Putin has signed a law officially recognizing digital currencies as property, setting the stage for comprehensive taxation and regulation of the cryptocurrency sector. Announced on November 29, the new law introduces an experimental legal framework to facilitate the use of digital currencies, including in foreign trade transactions.

Under the legislation mining and selling digital currencies are exempt from value-added tax (VAT), and organizations operating within the experimental regime are not subject to taxes on transaction facilitation. However mining operators are now required to report the users of their infrastructure to tax authorities, with penalties for noncompliance set at 40,000 rubles ($382.78). Revenue generated from mining is classified as non-cash income and taxed under standard income tax rates after deducting operational expenses.

For individuals the personal income tax on cryptocurrency transactions will follow a progressive structure: 13% for earnings up to 2.4 million rubles and 15% for amounts exceeding that threshold. Starting in 2025, corporate profits from mining will incur a 25% tax.

The law, passed by the Russian State Duma in its second and third readings on November 26 and approved by the Federation Council on November 27, introduces restrictions on tax systems available to entities engaged in cryptocurrency activities. Mining and cryptocurrency sales are excluded from simplified, automated, agricultural, self-employment, and patent tax systems.

The legislation reflects a significant shift in Russia’s approach to cryptocurrency oversight, emphasizing transparency and accountability in the sector. It also aims to create a regulatory framework to address the growing role of digital assets in the global financial ecosystem. The law takes effect immediately upon publication, with transitional provisions to support a smoother implementation process.

This development marks a pivotal moment for the cryptocurrency landscape in Russia, signaling the government’s intent to balance innovation with regulatory oversight.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Readers are advised to consult professionals for specific guidance related to cryptocurrency regulations and taxation.