Russia to Introduce 15% Tax on Crypto Earnings Amid Stricter Mining Regulations

The draft amendments, announced by the Ministry of Finance, aim to formalize the taxation of digital assets and reshape the nation’s regulatory landscape for the growing cryptocurrency sector.

The amendments classify cryptocurrencies as property for taxation purposes. Earnings from mined tokens will be taxed at their market value upon receipt, allowing miners to deduct operational expenses from their taxable income. This move ensures a balanced approach to taxing the capital-intensive crypto-mining industry.

Additionally, crypto transactions will be exempt from value-added tax (VAT). Instead, income derived from such transactions will fall under the same tax framework as securities, capped at a 15% personal income tax rate. To enhance transparency, mining infrastructure operators must report individuals utilizing their facilities to tax authorities. However, specifics on the type of information to be disclosed remain unclear.

Recent amendments imposed stricter regulations on cryptocurrency mining. Mining operations were limited to registered enterprises and individual entrepreneurs starting November 1. Although they do not need to register, home-based miners are subject to a 6,000 kWh monthly electricity usage cap.

Headquarters of the Federal Tax Service in Moscow. Source: Wikipedia

Temporary mining prohibitions will be implemented between December 2024 and March 2025 in energy-stressed areas like Irkutsk and the Donetsk People’s Republic in order to alleviate electricity shortages.

The Federal Tax Service (FNS) has proposed a two-stage tax system that includes taxing miners on unrealized gains—crypto assets held but not yet sold. While this ensures tax compliance, it could increase financial pressure on miners, especially during market volatility.

Industrial miners are now required to register with the FNS following a law signed by President Vladimir Putin in October. However, small-scale home miners remain exempt if they operate within the energy consumption threshold.

Beyond taxation, Russia is advancing its digital currency strategy. Sberbank, the country’s largest bank, recently announced a pilot for crypto-powered settlements, complementing the digital ruble pilot and discussions on state-backed stablecoins. These initiatives aim to integrate digital currencies into Russia’s financial ecosystem.

While the new tax framework provides clarity, challenges persist. Small-scale miners may struggle with profitability under the proposed rules, while the tax on unrealized gains could discourage new entrants. On the other hand, larger institutional mining operations may benefit from a structured and regulated environment.

According to CoinTribune, Russia’s crypto market is set to experience remarkable growth, with projections estimating the market size to reach 10 trillion rubles (approximately $101.36 billion) by 2026. Anatoly Popov, vice president of Sberbank, announced in Moscow that the current market volume of crypto assets has already surpassed 500 billion rubles in 2024. Popov forecasts that this figure will exceed 1 trillion rubles by Q1 2025 and potentially reach 3 trillion rubles by the end of the year.

Digital financial assets (DFAs) in Russia include cryptocurrencies, securities, and other digital finance forms governed by Russian law. Notably, DFAs are distinct from the digital ruble, the country’s central bank digital currency (CBDC).