The Central Bank of Russia has been asked to follow Japan’s example on legalizing bitcoin by a prominent Russian politician.
Russian Central Bank Learns About the Japanese Model
Boris Titov is a Russian politician and the Presidential Commissioner for Entrepreneurs’ Rights. In a letter to the head of the Russian Central Bank Elvira Nabiullina, he proposed that the bank follows the Japanese model in regulating digital currencies like bitcoin and ether, reported the Russian business daily Vedomosti on Friday.
Titov pointed out that Japan has recognized digital currency as a means of payment, not as money. He then outlined three outcomes of the Japanese regulations applicable to Russia.
Firstly, cryptocurrency exchanges are now regulated in Japan. They are required to register with the government as well as implement strict anti-money laundering (AML) and know your customer (KYC) measures. For example, they must regularly monitor and report any suspicious activities to the authorities, Titov explained.
Secondly, he noted that the regulations are imposed on the management of assets, and the exchanges are subject to regular audit by the financial authorities. This is to protect cryptocurrency-using customers. “Japan has also introduced procedures for dealing with claims,” he added.
Thirdly, he conveyed that Japan has removed VAT on purchases and sales of digital currency but not VAT on purchases. However, he noted that the Japanese National Tax Agency has not yet clarified how to deal with income tax or corporate tax levied on digital currency transactions.
Russia Undecided on How to Treat Cryptocurrency
Currently, the Russian Ministry of Finance and the central bank are discussing whether digital currency should be regulated. The Finance Ministry has promised to submit proposals to the government in the “near future,” Vedomosti reiterated.
Deputy of the Russian Central Bank Olga Skorobogatova has proposed for cryptocurrencies to be considered digital goods for the purpose of monitoring and reporting taxes.
Meanwhile, Deputy Finance Minister Alexei Moiseev said in early June that cryptocurrency regulation will be similar to the regulation of derivatives.
His idea was echoed by Chairman of the State Duma Committee on Financial Markets Anatoly Aksakov, who stated that cryptocurrency should be considered a financial instrument on par with securities and derivatives. “These transactions are not subject to VAT, so should not be taxed,” the newspaper quoted Aksakov saying. He then suggested that cryptocurrency should be treated similarly.
While Russia has not decided how to treat cryptocurrency, Aksakov said that discussions are underway on the terminology and definition of cryptocurrency.
Responding to Titov’s proposal, Nikolai Legkodimov, a KPMG partner is “confident that Russia will be able to successfully adapt the Japanese model,” Vedomosti wrote. He then noted that light regulation may be attractive for the industry.
Do you think the Russian government will decide to follow Japan’s lead? Let us know in the comments section below.
Images courtesy of Shutterstock, Wikipedia, Russian Central Bank, Russian Ministry of Finance
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Russian Politician Proposes Central Bank Follow Japan’s Lead to Legalize Bitcoin