Boris Titov, a Russian politician and Presidential Commissioner for Entrepreneurs’ Rights, has asked the Chairman of the Russian Central Bank to follow the Japanese model in regulating digital currencies like bitcoin and ethereum according to a copy of the letter obtained by Vedomosti, Russia’s version of Financial Times.
According to a rough translation, Titov said Japan has regulated exchanges, requiring the usual AML/KYC, has allowed free trade of digital currencies and, crucially, has removed VAT on digital currencies like bitcoin and ethereum.
That’s a model the Central Bank should follow, Titov said at a time when the Russian Ministry of Finance and the Central Bank are discussing the future of digital currencies.
The Deputy Finance Minister, Alexei Moiseev, said in early June that digital currencies regulations will be similar to that of derivatives.
While the Chairman of the Duma Committee on Financial Markets, Anatoly Aksakov, suggested digital currencies should be considered as a financial instrument on par with securities and derivatives which are not subject to VAT, so should not be taxed, according to Vedomosti.
Russia currently has no legislation on digital currencies, with the current debate being on terminology and their classification.
Meanwhile, Japan has gone further than any nation in declaring bitcoin and other digital currencies as legal tender, an historic first, while at the same time removing taxation.
Britain has sort of taken the same approach all the way back in 2014, but without explicitly classifying digital currencies as legal tender. However, they are not subject to VAT when used as a currency.
America and Australia are both heavily criticized for double taxation of digital currencies, stifling growth while making the business environment somewhat unfriendly.
It is probably because of their approach and to offer a jurisdictional alternative to entrepreneurs that Britain followed seemingly the opposite direction. While Japan’s recent very friendly legislations are seen as a response to China’s sudden and dramatic intervention in this space at the beginning of the year.
During these movements, Russia hasn’t been much of a player, but that can change if their legislators signal friendliness to this space, something now being seriously considered.
It comes just weeks after Vitalik Buterin, ethereum’s inventor, held a brief discussion with President Putin where they considered how blockchain technology can help Russia’s industry.
We’ll have to wait and see until formal legislation for Russia’s response, but Putin’s response was that he “supported the idea of establishing business contacts with possible Russian partners.”
Whether that suggests they are now open for business as far as this space is concerned is not yet clear, as the Duma is soon to make what might be an historic decision.