Russia is turning to Blockchain technology in an effort to counter economic isolation brought on by sanctions imposed due to its invasion of Ukraine.
The State Duma, the lower house of the Russian legislature, has passed a bill on the taxation of digital assets that exempts their sale from value-added tax (VAT) in the Russian Federation. Some other services of digital asset exchanges will also be exempt, according to the state news service RIA Novosti.
About the Bill
The bill establishes tax rates of 13% for Russian exchanges on the first 5 million rubles (currently about $93,000) of the annual tax base, 15% on amounts exceeding that limit, and 15% in general for currency traders. The current tax rate for companies is 20%.
Taxation of digital assets under the bill is analogous to taxes on securities, reports RIA Novosti. The government noted in the bill that a separate tax procedure for digital assets is key to creating an efficient and competitive digital economy.
Russia has moderated its skeptical stance on cryptocurrency as the country has increasingly felt the pressure of Western economic sanctions stemming from its invasion of Ukraine. Major Russian banks have been blocked from the SWIFT system and G7 countries have banned the purchase of freshly mined or refined Russian gold this week. These measures, along with a series of other sanctions, led to Russia defaulting on foreign debt service on Monday.
Russian Banks’ Action Plans
The Russian bank Sber is preparing to launch a stablecoin, and the first deputy president of the Russian Central Bank, Olga Skorobogatova, stated in an interview on June 23 that tests of a digital ruble will be brought forward from 2024 to April 2023. Currently, a pilot project involving twelve Russian banks is underway.
“I believe that every state worth its salt will have a national digital currency within three years. […] We must be ready as soon as possible. Also, this will solve the problem of the blocking of SWIFT, because this integration will make SWIFT not necessary,” Skorobogatova said.
In regards to Sber plans, on June 15, Anatoly Popov, deputy chairman of Sber’s board of directors, revealed that the bank has been struggling to register its digital asset issuance platform, which was initially expected to launch alongside its stablecoin Sbercoin in spring 2021.
Additionally, Popov noted at the time that the bank was committed to exploring the technology. He explained that,
“We are closely watching the development of new technologies such as distributed ledger technology. We are studying how blockchain technologies are developed. Our platform has already passed acceptance tests and the first transaction will take place within a month.”
Notably, in May this year, Moscow began to take a positive stance towards digital assets after its invasion of Ukraine triggered a strong response from Western nations in the form of sanctions.
Ivan Chebeskov, who heads the Financial Policy Division within the Russian Ministry of Finance, has actively considered bringing crypto payments on board. “The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said.
Support for the legalization of cryptocurrencies seems to come from all segments of the Russian government. According to Trade Minister Denis Manturov, Moscow plans to legalize cryptocurrency payments “sooner rather than later.”
By Audy Castaneda
