The crypto market is tightly controlled in Russia as the government there is trying to prevent people from evading taxes with these untraceable cryptocurrencies. During an interview, Daniil Egorov, Head of the Russian Federal Tax Service (FNS), expressed his concerns about the negative impact of cryptocurrencies on the national treasury if they are not properly monitored. According to Egorov, these decentralized crypto tokens are capable of causing a “significant erosion” to the Russian tax base. FNS is now exploring ways to respond to crypto tax evasion as well.
“If we talk about cryptocurrencies, we are now closely involved in this market, recognizing that this system of accounts can lead to a fairly significant erosion of the tax base,” a report by RBC Group for Russian media quoted the tax official as saying. Monday 22nd November.
Revealing plans to install automated tracking systems to handle huge data volumes, Yegorov said it was only a matter of time until the “untraceable” link that makes the encryption space unique, and traceable.
“Technologies are used, anonymization is used in terms of service delivery by many scammers, of course. When you get into the digital space, you still leave a trail somewhere. It’s a matter of time before that path is determined,” the FNS official added.
Cryptocurrencies are currently untraceable in nature, a decentralized digital finance system where records are kept using cryptography, not any bank or physical intermediary.
As of January 1, 2021, cryptocurrencies have been declared “allowed” in Russia – but not used as an exchange for goods and services. Russians can mine, trade and hold cryptocurrency — but using it as a payment option could push people behind bars, according to a Forbes report.
While the Russian government has talked about creating its own regulated digital currency, holding an undisclosed digital currency between $1,300 (around 97,500 rupees) and $13,000 (around 9.7 thousand rupees) is a crime subject to a fine and imprisonment in the state.
Regulating cryptocurrencies around the world
Besides Russia, other countries are also looking for ways to tax cryptocurrency.
In India, for example, the Federal Ministry of Finance has set up a new committee to see if income from cryptocurrency trading can be taxed.
Earlier this month, US President Joe Biden also signed a new law that includes tax reporting provisions that apply to cryptocurrencies.
Meanwhile, the cryptocurrency market is booming internationally. Currently, the global cryptocurrency market capitalization is around $2.9 trillion (about Rs 2,15,66,720 crore) according to CoinMarketCap data.