Blockchain News

Russian lawmakers delete ‘mining’ from their Digital Financial Assets bill

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

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Bitcoin Legality By Country (world map)

Lets take a look at the legality of Bitcoin by country. It’s been surprising to see regulators take a wait-and-see approach with Bitcoin with many, including myself, expecting heavy handed regulation to come fast and hard for this industry. The ICO craze of 2017 and subsequent parabolic BTC price move made this a huge topic of conversation throughout the finance world and gave regulators a lot to think about. We’ve see a congressional hearing in the United States focus on Bitcoin and what approach to take with regulation, as well as EU Parliment resulting in a slightly favorable ruling. This map, courtesy of coin.dance, shows the varying degrees of Bitcoin legality across the world.

It will be interesting to compare this map with cryptocurrency hubs that drive adoption and investment. We’ve already seen Puerto Rico and Switzerland become hotspots for blockchain companies….is Seoul or another under the radar city next? Let us know!

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Interested in other cool crypto posts….check out Mining Wars: Bitmain vs Dragonmint and The Price of Bitcoin vs Cost of Mining.

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J5 Alliance Established To Combat Crypto Tax Crimes

An alliance of 5 nations, including the UK and US, has been established to look at ways to tackle financial crimes, including looking at cryptocurrency and the fact that it is being used to avoid paying local taxes, as well as for money laundering.

Regulations Needed?

There has been a lot of call for transparent regulations, not only from governments but from some analysts and investors too. They believe that regulation will provide stability, flatten out some of the volatility that is present in the marketplace, and attract more investors, in particular institutional investors. Some countries have made moves to counter what they perceive as a growing financial threat. China initially banned all cryptocurrency trading, although they have softened their approach recently, while the Reserve Bank of India has directed all banks to wind up trading with any cryptocurrency exchanges. During a meeting of the G20 nations in April this year, the world’s largest economies concentrated a lot of discussion on the topic of how best to tackle the problem, although nothing concrete has been determined or announced.

Investigating Cryptocurrency Crimes

The Joint Chiefs of Global Tax Enforcement (J5) has not been set up to determine overall regulations, but they will be looking at how to tackle cross-border financial crimes. Cryptocurrency does not operate within any geographical boundaries, and the group has said that they will be looking at cryptocurrency because there is the potential that criminals will increasingly use it to launder money, but also because of a lack of financial reporting for tax purposes.

The group is made up of the Australian Taxation Office, the Canada Revenue Agency, the Fiscale Inlichtingen-en Opsporingsdienst of the Netherlands, H.M. Revenue and Customs of the UK, and the US Internal Revenue Service Criminal Investigation.

International Collaboration

According to the J5 website, the group will “collaborate internationally to reduce the growing threat to tax administrations posed by cryptocurrencies and cybercrime and to make the most of data and technology.”

Interested in other cool crypto posts….check out Mining Wars: Bitmain vs Dragonmint and The Price of Bitcoin vs Cost of Mining.

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