The use of Bitcoin is increasing in Russia. In fact, Russia currently has the second highest trading volume of Bitcoin per nation in the world. It is only behind China in this regard. Further, Ulmart, Russia’s biggest online retail company, has just declared that it will start accepting Bitcoin payments.
Because of the increasing use of Bitcoin by its citizens, Russia has just announced that its central bank is creating a proposal that is designed to categorize Bitcoin and other cryptocurrencies as digital goods. Digital goods are goods that are stored, delivered, and used in an electronic format.
This news was announced by Olga Skorobogatova, Deputy Governor of the Central Bank of Russia. Skorobogatova cited tax purposes as the reason for the proposed categorization of cryptocurrencies as digital goods.
Speaking on the Central Bank of Russia’s proposal for cryptocurrencies, Skorobogatova says, “We propose to treat them as digital goods, use the digital goods legislation, with certain amendments on taxes, control, and record-keeping.”
Cryptocurrencies can be difficult to classify for governments, because they are technically currencies. However, because they represent value in a digital format, it can be easier for governments to categorize them as digital goods. This is why Russia is attempting to do this.
The Central Bank of Russia had been trying to classify cryptocurrencies for a period of time. Other options besides digital goods that it was trying to choose between include assets, cash, and securities. The first draft of the proposal for this legislation is expected to arrive sometime in June. So, it will be here very soon.
Skorobogatova cited a number of concerns about cryptocurrencies that have led to the need for an official government classification. The first is the steadily rising use of them. The second is the fact that cryptocurrencies are not tied to gold or other precious metals, and they are not controlled by federal governments. So, if problems occur with these currencies, then it can cause major financial issues for many people
Speaking further on this issue, Skorobogatova says, “If people are engaged in this (cryptocurrency use), they have to pay money for it. And we must understand how to control these activities.” So, it appears that the classification efforts being made by the Central Bank of Russia are also largely geared towards increased security of cryptocurrencies.
There have been mixed opinions on what the best thing to do with cryptocurrencies is in Russia. In fact, there have been calls to outlaw them. However, Vadim Kaluhov, the Director of Financial Technology, Projects and Process Management at the Bank of Russia said, “By pushing the process of exchange out of the country, we actually lower the level of security and stability.”
So, it is clear that some high ranking officials view regulation as the safer approach for handling cryptocurrencies compared to outlawing them. Despite the differing opinions on cryptocurrencies, the Central Bank of Russia appears to have finally taken a stance on them.
Once the legislation is finalized, it will become law if it goes through. Then cryptocurrencies will officially become digital goods in Russia.