The Russian cryptocurrencies market has suffered a blow after parliament voted to delete the term ‘mining’ from its Digital Financial Assets bill. This comes after an earlier deletion of the term ‘cryptocurrency’. The spirit behind these amendments is to fully devolve the function of taxation of digital tokens to the oversight arm of the Federal Tax Service.
The thinking behind the amendment was to eliminate ambiguity in the said piece of legislation. After removal of the word ‘cryptocurrency’, it would make no sense to have ‘mining’ mentioned in the same Bill. The move was to also regulate Russia’s growing crypto-industry.
Parliamentary Financial Market Committee
Speaking to news outlets, the head of Russia’s parliamentary Financial Market Committee said that the bill would not solve crypto-taxation issues. He spoke at the sidelines ‘Finopolis 2018’, a financial conference organized by the Bank of Russia. He added that the earlier vote to do away with the mention of ‘cryptocurrencies’ necessitated the subsequent dropping of all references to ‘mining’ in the proposed bill. According to the Duma (Russia’s lower house), it would make no sense to have ‘mining’ without ‘cryptocurrency’.
The term ‘mining’ had been defined in the bill as the process through which cryptocurrencies are created or the process of rewarding entities for validating cryptocurrency transactions. The focus of recognizing cryptos was to tax excessive consumption of electricity.
Subsidized residential and non-commercial electricity
In Russia, residential and other non-industrial consumptions of electricity are highly subsidized. It was perhaps this incentive that led a church in Russia to venture into Bitcoin mining before being nabbed. It was alleged that between May and August this year, the church had consumed power in the excess of 2 Million Megawatts. A police raid into the church known as Grace unearthed an assortment of computing equipment in the premises.
Sources close to Putin’s kremlin say that the legislative move was to buy some time to conform to the Financial Action Taskforce. The latter is to present an array of anti-money laundering regulations for the cryptocurrency markets. The president’s representative for digital and technological development, Dmitry Peskov added that it was of importance that the market is regulated to set standards for consumer protection.