Category Archives: Duma

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Russia to Develop Its Own Crypto Mining Pools in Light of Overseas Mining Invasion

Crypto mining in Russia is becoming a big industry on an individual level, but more importantly for the government at an industrial scale also. This is now driving operators towards locally run Russian mining pools.

The Russian Association of Crypto Industry and Blockchain (RACIB) claims that there are now over 400,000 people employed in the sector. 70,000 enterprises operate hundreds of thousands of mining rigs, with an increase in one-man operators working from their homes. The agency has made it clear it would like to see the complete legalization of cryptocurrency mining in the country.

The industry is creating new jobs; and calls for electricians, engineers, and IT specialists are on the rise as a result of crypto mining by large-scale enterprises. In an effort to regulate the industry and set higher standards, RACIB’s director Arseniy Shcheltsin wants to focus on large-scale professional mining and find solutions to better equip the industry.

A majority of these larger facilities currently work with Western and Asian mining pools, increasing the need for Russian firms to work within the restriction imposed by overseas pools often including prohibitive tax regulations.

As a result, the RACIB has linked up with Crypto Universe company to develop two mining pools under the project name “Mine Russia”. Each of the pools is speculated to support 3000 units, mining a range of cryptocurrencies. One of the main aims of the project is to cut back on the amount of Russian money going towards foreign enterprises through crypto mining. RACIB’s president has vowed that there will be no hidden fees for the transfer of assets or connecting the mining equipment to the new network.

Russia has become popular with overseas companies due to its low energy costs, with another recent drop in electricity rates recently from 5-7 rubles to 4-5 rubles in the last year. Prices are half that amount in some areas, making the country one of the lowest in the world for energy.

Although, Russia is still vehemently anti-crypto in terms of legislation, at least at the street level. Mining, on the other hand, is favored for its obvious economic attributes and is propped up by legislators. Cryptocurrency bills are going through the State Duma for a second reading later this year.

Overseas, the Russian New Mining Company is investing 125 million USD into a massive Bitcoin mining operation in Alvdal, Norway. This is a 20-minute drive from Tynset, Norway where Trident Juncture will begin on 5 October 2018. Trident Juncture will be the largest North Atlantic Treaty Organization (NATO) military exercise in Norway’s history.

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Russia Whitelists 50 Crypto Companies, but Rules Still on Hold

A register of 50 whitelisted companies has been compiled by the Russian Association of Cryptocurrencies and Blockchain, reports Bitcoin.com.

The list of companies, consisting of firms which are either approved and awaiting verification by the Russian regulators, includes cryptocurrency sectors from crypto mining to ICOs.

Russia is currently consumed with regulating the industry, in a turnaround which earlier this year had Vladimir Putin’s economic advisor, Sergei Glazev stating that cryptocurrency could be used to carry out “sensitive” state activities, such as avoiding sanctions imposed by foreign governments and private companies. A national crypto ruble was conceived and rejected.

Meanwhile, cryptocurrency regulation in Russia has been delayed, and president Putin recently suggested that people should treat cryptocurrency cautiously since it was not supported and that the Central Bank of the Russian Federation did not consider cryptocurrency a means of payment or a store of value.

Blockchain continues to receive support among researchers in the country. The government is actively looking at how blockchain may be used to improve the workability of its defence and information systems, along with NATO and the Pentagon.

RACIB has said that part of its plan is to track what it regards as unfair ICO projects after an estimated RUB 270 million (USD 4.3 million) had been lost to illegal cryptocurrency scams or scams. The idea of the register is to shortlist companies which the body can verify as bona fide operators.

A statement by RACIB said that the new register “…consists exclusively of organizations that have undergone voluntary verification of reliability” which was based on “financial sustainability, experience and business reputation, lack of judicial judgments, availability of licenses and certificates (if necessary), [and] no arrears of taxes and fees”.

Russia’s position on the regulation of cryptocurrencies and ICOs is still awaiting clarification although the first bill “On Digital Financial Assets” successfully passed its first reading in the Russian Duma in May.

 

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Russians Race to Pay Crypto Taxes Before Government Legislation

It has been reported that Russian taxpayers are now declaring their crypto earnings prior to Duma legislation being passed in the country.

Many European countries are currently tackling their tax laws in the light of the increasing popularity of cryptocurrencies and a rapid rise in digital currency adoption.

France is a case in point. French daily Le Monde noted earlier this year that the crypto tax rate would be lowered after citizens appealed to France’s highest regulatory body to change the regulations for crypto transactions that had been in place since July 2014. The Conseil d’Etat set the new crypto tax rate at 19%, dropping it from a huge 45%; reportedly the move was specifically aimed at Bitcoin.

Poland also changed its original position on cryptocurrencies in that country, as part of a thorough analysis of the crypto space, announcing that it would be temporarily suspending tax collection for digital currencies, in view of tax legislation not being in place. Again, as in France, public demand was a driver behind the government changing its tax policy.

In Russia, the tax situation is very much in limbo while the Duma comes to a decision as how to deal with cryptocurrency earnings. Results from this year’s tax campaign show that investors appear to have taken the matter into their own hands, prior to any government action, declaring their cryptocurrency in their April tax returns. Income tax in the country currently stands at only 13%.

The situation in light of the current status quo, without specific legislation, requires Russian citizens to adhere to current tax laws. The tax base for earnings in cryptocurrency payable in Russian currency, the ruble, is aimed primarily at an accrued profit; the excess amount of the total received from the sale of cryptocurrency over the buying price.

New laws will also come into effect next year which will address those engaged in crypto-related activities, including mining and trading, which also extends to both owners and clients of cryptocurrency platforms. These laws have been implemented due to a huge 12% of the population earning a living as their main source of income through cryptocurrency activities.

 

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Moscow’s Largest Exchange to Develop Platform for Companies to Conduct ICOs

Moscow’s largest exchange, MOEX is planning on allowing companies to initiate initial coin offerings (ICO’s) sometime during this year, reports Reuters.

The Moscow Exchange is the main liquidity and price discovery center for Russian financial instruments. It trades in equities, bonds, derivatives, currencies, money market instruments, and commodities, with a total trading volume of around $1.1 trillion, as of May 2018, according to Cointelegraph

The exchange is reportedly developing the infrastructure which will not list tokens, but primarily offer information about the responsibilities of token issuers. MOEX CEO Alexander Afanasiev explained:

“Right now we’re looking at this from the point of view of fiat currencies because cryptocurrencies don’t have the status of a legally protected asset. If they obtain that status, we will place them in our system as well.”

Provided there is significant investor interest, the exchange is also planning to issue futures contracts for ICOs, once that research on products and future types investors might require is completed.

The Russian government is reviewing cryptocurrency regulation under the Digital Assets Regulation Bill, filed 25 January. The bill defines cryptocurrencies and tokens as digital financial assets. If the bill passes in its current form, it would allow trading on cryptocurrency exchange operators with authorized Know-Your-Customer (KYC) standards. This would also apply to initial coin offerings (ICOs) established in Russia. The Russian Duma will also lay out specifications for interacting with crypto and blockchain-related technologies.

Last month Sberbank CIB, the investment banking arm of major Russian bank Sberbank, and the National Settlement Depository, which is part of the Moscow Stock Exchange Group, has announced that it plans to pilot the country’s first official ICO planned for a launch later this year

Russia’s crypto space is beginning to get some traction during 2018 despite, President Putin’s past very vocal reticence and condemnation of privately owned digital currency, albeit it state-focussed. Just last month a prominent state-owned Russian bank Gazprombank announced plans to facilitate cryptocurrency transactions in Switzerland.

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Russian Railways Push Smoother, Cheaper Crypto Ticketing

Media reports have indicated that state-owned Russian Railway company RZD has plans to implement blockchain applications, smart contracts, and ticket sales, according to Bitcoin.com.

Several publications in recent months have suggested that RZD, self-named as “The Strongest Link in Eurasia”, may even start a cryptocurrency paid ticketing service. The company ranks itself as among the top three railways systems in the world.

In order for RZD to bring its plans to fruition, it will need to comply with Russia’s somewhat punitive current stance on cryptocurrency. If the Russian Duma’s new plans to liberate cryptocurrency from current legislation eventuate, this could offer the railway more scope to bring its planned projects closer to reality.

The Duma, parliament’s lower house, has to date supported the first reading of three draft law bills – ‘On Digital Financial Assets’, ‘On Attracting Investments Using Investment Platforms’ and ‘On Digital Rights’. The bills, which would relax current cryptocurrency regulation, are expected to be made law by the end of this month.

Independent IT expert Pavel Tarentyev such new laws could work very much in the State Railway’s favor, commenting:

“In view of the forthcoming adoption of the drafts, which entail the possibility to exchange digital financial assets with rubles and [foreign] currencies, OAO ‘RZD’ plans to introduce decentralized storage of data based on blockchain technology and implement smart contracts.”

He added that RZD also hopes to use the technology for storing important information relating to its transportation services and to reduce the costs of its logistics services.

Last month. the head of RZD’s IT department, Evgeniy Charkin, had said that such plans were seriously being considered and Oleg Belozerov, director general of the company, has indicated that the company is already digitizing many of its systems.

Online companies such as Destinia are already offering crypto ticketing around the world, offering tickets for railway systems in Spain, Italy, Belgium, Luxembourg, the Netherlands, the UK, France, Portugal, Canada, and the US.

 

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Russian Central Bank: ‘Crypto Assets’ No Threat to Global Financial Stability

Crypto assets don’t currently threaten global financial stability, according to a 30 May report released by Russia’s Central Bank, writes Cointelegraph.

The report went on to say that, due to comparatively low global cryptocurrency volumes, this particular segment is insignificant at present, posing no actual threat to global stability in financial sectors. Similar to a recent Dutch internal report aimed at the Netherland’s domestic economy released this week, the report found that this risk would grow if banks and institutional investors became more significant players in the crypto space.

The research also recommended that the term “cryptocurrency” be replaced by the term “crypto asset” which can be considered a financial asset based on the application of cryptography and distributed ledger technology. The report claims that these assets currently have little chance of becoming a reliable value standard or means of exchange due their high price volatility.

The paper goes on to focus on one of the major debates in governmental financial circles of the risks posed by crime, including money laundering and terrorism and the lack of protection for investors rights. New laws recently passed by the Russian State Duma defined cryptocurrencies and tokens as property, and specified new regulations for utilizing blockchain technology.

Russian bank Sberbank CIB and the National Settlement Depository are piloting Russia’s first official ICO having considered the Russian ICO market could be “highly promising”, particularly given bank customers’ interest in “this new way of fundraising”, according to CIB head Igor Bulantsev.

Arsen Bakhshiyan, CFO of crypto platform Kvantor, feels that the time is right for Russia to be a world leader in cryptocurrency, pointing out that the country, according to Finder, and is well positioned, and has the talent to develop its own separate blockchain system, suggesting:

“…one only has to look at some of the most ground-breaking FinTech developments of the past few years to see the prevalence of Russian talent. Major projects including Ethereum, Telegram, Revolut, and Yandex are all led by Russians, suggesting that the country has a real appetite for technological innovation.”

President Putin has begun to show clear signs that he sees Russia as a major world player in bringing blockchain into mainstream usage, stating recently that he has no intention of allowing the country to be “late in the race” and even meeting Vitalik Buterin, co-founder of Ethereum.

Last month in a massive turnaround from being vehemently anti-crypto the Russian President’s economic advisor, Sergei Glazev has stated that cryptocurrency, or “crypto assets” could be useful to carry out “sensitive” state activities, according to a report in the Financial Times.

 

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