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Russia approves plan to recognize crypto as currencies

February 9, 2022 By Benson Toti

  • GlobalBlock analyst Marcus Sotiriou says the move contrasts the Bank of Russia’a earlier call for a ban on crypto

  • He notes that the new regulatory approach comes amid suggestions the Russian government might be eyeing a $13 billion crypto tax market

  • Bitcoin price continues to hover above $44,000 amid growing fundamental strength

Cryptocurrency usage in the Russian financial system will soon be anchored in law after the Russian government and the Bank of Russia agreed to plans to officially recognise digital assets like Bitcoin as currencies.

According to reports in local media, the government and the central bank have formulated a draft proposal seeking to regulate cryptocurrencies. Under the agreement reported on by Kommersant news publication, the draft law is expected by 18 February.

This will see digital assets such as Bitcoin regulated as a form of currency, and not digital financial assets.

The news about Russia’s move comes as Bitcoin continues to battle resistance around $44,000, having bounced off January lows near $33,000.

According to Marcus Sotiriou, an analyst at UK-based digital assets broker GlobalBlock, the “fundamentals in the crypto industry grow stronger” suggesting Russia’s move could add to positive sentiment currently highlighted in the BTC market.

Russia eyes $13 billion crypto tax market

Sotiriou notes that Russia’s decision to seek draft legislation that recognises digital assets as currency “is in contrast to the central bank’s proposal last month.”

At the time, the Bank of Russia sought to have “miners and other crypto businesses” banned, with financial regulators highlighting the potential for crypto to pose risks to the country’s financial system.

Earlier this month, India moved to recognise crypto when it put a 30% tax levy on crypto income, suggesting the country’s authorities were not keen on banning crypto and related activities. Russia appears to be looking at a similar scenario, according to GlobalBlock’s Sotiriou.

In comments shared with CryptoAdvisor, he noted:

“This move from Russia comes after authorities in Moscow project the country could earn $13 billion per year in taxes from the Russian crypto market. Furthermore, analysts predict that the Russian crypto market is valued at over $214 billion, which is about 12% of the total value of the global crypto market.”

Under a draft report highlighted in local media, Russian residents will be able to use cryptocurrencies as money, but only after going through proper identity checks.

This will happen through collaboration between banks and licensed crypto providers, with the banks acting as intermediaries

One of the draft proposals required that all transactions above 600,000 rubles be reported. Transacting outside set guidelines and limits will constitute a criminal offense.