Russian lawmakers pass bill to exempt cryptocurrency issuers from tax

The lower house of the Federal Assembly of Russia approved a bill on June 28 that would exempt cryptocurrencies issuers from Value Added Tax Sanctions, which are hurting unfriendly nations more than Russia.

Pressure on the Russian financial system was put under pressure by the decision to cut Russia out of the SWIFT system in late February.

There is growing evidence that the sanctions are hurting more countries, especially in the restricted supply of oil, gas, and wheat.

Russia defaulted on June 27 on a $100 million international bond interest payment for the first time in over 100 years. The Kremlin said it has the means to meet its obligations thanks to oil and gas revenue.

The Finance Ministry said it had fulfilled its duties by depositing money in its onshore National Settlement Depository NSD. However, sanctions have blocked the payment to recipients, which Kremlin spokesperson Dmitry Peskov said was not our problem. Russia had a hardline approach against cryptocurrencies before the conflict with Ukraine began on February 24. The Central Bank of Russia has issued a report warning of the risks associated with digital assets, even proposing a complete ban in December 2021.

After the invasion Russian officials backed off their hardline stance and embraced the criptocurrency sector. With that came a host of pro-crypto moves, such as talk of selling oil and gas to friendly nations usingBitcoin and legalizing cryptocurrencies mining.

The head of Russia's Financial Policy Department, Ivan Chebeskov, suggested that Russia could use cryptocurrencies to settle international payments.

The bill proposing VAT exemptions for criptocurrency issuers was the latest move triggered by the ongoing situation.

Income earned through selling cryptocurrencies is also set to get more favorable tax rates. The current tax rate for such transactions is 20%. The new rate would fall to 13% for Russian companies and 15% for those abroad, according to the proposals.

The bill must be approved by the upper house of the Federal Assembly and approved by President Putin before it can be passed into law.