This is the first in a series of weekly news highlights about blockchain technology and cryptocurrency in Russia. Last week’s headlines included an endorsement of blockchain technology from President Putin, tax exemptions for cryptocurrencies and a legal decision that prevented the seizure of cryptocurrency assets in a bankruptcy case.
Putin Endorses Technological Development in Russia
During his conversation with Herman Gref, the head of Russia’s largest bank, Sberbank, Russian President Vladimir Putin said he supports the development of new technologies, including blockchains, and stated that the country cannot be “late to the race” of blockchain development and adoption.
Gref, whose bank plans on implementing blockchain technology, spoke about the need for “professionals in this field.” He proposed that the government include blockchain technology in education and training programs in order to prepare specialists.
He also called for “soft” regulation, without a ban of cryptocurrency, that would help promote technological innovation. To which Putin responded that technological development is incredibly important for Russian economics, and that, while Russia has oil, gas, metals and diamonds, it still needs a “spurt” to become one of the global technological leaders.
Putin confirmed this message in his annual address to the Federal Assembly on March 1, 2018, claiming that countries riding the new technology wave will move ahead, while all the rest will be outdone.
A working group of the Ministry of Economic Development has proposed to create tax breaks for cryptocurrency income as an amendment to the draft law “On Digital Financial Assets.” This means that all the income from cryptocurrency businesses (trading, mining, ICOs) will be taxed less than other types of businesses.
Another suggested modification called for increasing the limit of individual investments in initial coin offerings (ICOs), from 50,000 to 500,000 rubles (equivalent to $900 to $9,000 USD). The working group also proposed that Russian investors be permitted to invest in foreign ICOs. The law is still under development, but it should be enacted in July 2018.
The Moscow Arbitration Court has ruled that cryptocurrency cannot be used as a payment to creditors in the bankruptcy case of Ilya Tsarkov, a Russian citizen who filed for personal bankruptcy in October 2017.
The prosecutor proposed that Tsarkov’s crypto assets be seized as a debt payment and requested that Tsarkov disclose his cryptocurrency holdings. Tsarkov reportedly showed that he was in possession of a wallet containing bitcoin on blockchain.info but claimed that, as cryptocurrency is not considered property in Russia, it would not be possible to foreclose on them.
The court agreed and refused to grant the prosecutor’s request to seize Tsarkov’s cryptocurrency assets as a way to repay his debt.