Australia mulls tax reform; Bank of Russia prepares for shakeups

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As the need for uniform global rules for digital assets becomes glaring, Australia is looking to adopt a tax reporting standard for digital currencies into its local legislation. Elsewhere, Russia’s central bank is set to welcome change with the exit of its deputy governor, which is expected to significantly impact its central bank digital currency (CBDC) plans.

The Australian Treasury Department is seeking public opinion on ratifying the tax reporting framework released by the Organisation for Economic Co-operation and Development (OECD). Dubbed the Crypto-Asset Reporting Framework (CARF), the body of rules aims to promote the transparency of digital asset transactions for tax authorities in different jurisdictions.

It appears that Australia will adopt CARF into its tax framework, but the Treasury is faced with two options: it can adopt the framework wholesale without any amendments, or it can amend it to meet local requirements.

In its consultation paper, the Treasury stated that industry stakeholders and the public are encouraged to send their written opinions to the department by January 2025. Currently, Australian authorities are keen to adopt CARF guidelines or a semblance of the rules by 2026 unless a black swan event derails the plans.

“Subject to a final decision of Government, it is envisaged that CARF reporting requirements would commence from 2026, to ensure the first exchanges between the ATO and other tax authorities could take place by 2027.”

The Treasury noted that the timeframe allows industry players to update their internal systems to achieve compliance with the standards.

The OECD rolled out CARF in 2022 to tackle the rising spate of tax evasion using digital assets. Under the guidelines, virtual asset service providers (VASPs) will be required to report digital asset transactions meeting a certain threshold to the tax watchdog to improve transparency.

Several countries have already signaled an intention to adopt the OECD guidelines. While Australia is mulling over the best adoption strategy, Canada and New Zealand are moving toward full-scale adoption, eyeing 2026 as the commencement date.

Heightened enforcement action

This latest development aligns with Australia’s effort to fight against digital currency-backed money laundering offenses by increasing enforcement action and tightening loopholes in its regulatory playbook. 

In October, the Australian Federal Police (AFP) confiscated $9.3 million worth of digital assets suspected to be proceeds of criminal activity.

“The restraint of these assets shows the technical capabilities and powers that the AFT, and our partners through the CACT, are able to bring to bear on organised crime,” said the AFP. “Whether you have tried to hide them in real estate, cryptocurrency, or cash, we will identify your ill-gotten goods and take them away from you, leaving you with nothing.”

Bank of Russia reorganizes

First Deputy Governor of the Bank of Russia, Olga Skorobogatova, has confirmed plans to exit her role in the central bank after several years of meritorious service with the banking regulator and leaving behind a streak of financial policies.

Skorobogatova will step down from her role as First Deputy Governor on December 2, a move expected to have ripple effects in the central bank’s ranks. The reason for her departure remains unclear.

Skorobogatova will be replaced by the bank’s current IT director, Zulfiya Kakhrumanova. Other internal shakeups will see Dmitry Tulin move up to take the helm of affairs at the national payment system, a local alternative to international payment systems.

Since joining the central bank in 2014, Skorobogatova had an impressive heatmap in Russia’s financial ecosystem, laying the foundation for a CBDC. Apart from the pioneering work with the digital ruble, Skorobogatova played a crucial role in establishing the national payment system, a role that she juggles with the First Deputy Governor’s office.

As the wave of economic sanctions hit Russia, Skorobogatova’s work with the national payment system came in clutch for the pariah state, allowing financial institutions to settle transactions.

Bank of Russia Governor Elvira Nabiullina hailed Skorobogatova’s influence in the central bank’s policies as “pioneering” and key to the future health of the Russian economy.

“Olga Skorobogatova is one of the main architects of a great number of key innovative projects in the Russian financial market,” said Nabiullina. “Her strategic vision and ability to implement complex technological solutions have helped Russia create a state-of-the-art payment infrastructure that we are justifiably proud of.”

With the digital ruble, Skorobogatova pushed for a cautious approach while covering all the basics and introducing a range of functionalities, including programmability, in early experiments.

Despite the accolades, critics have criticized the outgoing executive for failing to do her part to prevent the conflict with Ukraine. According to a report, Skorobogatova and other central bank executives did not sever ties with the President and “defend their belief in open markets.”

Skirting around sanctions

As the sanctions hit hard, Russia turned to several strategies to process international transactions, including rerouting payments to China via subsidiaries and lower-tiered banks. The country also explored using digital assets like stablecoins to circumnavigate sanctions, with the central bank testing the waters with tokenized commodities.

Furthermore, Russia leaned on its weight to push for the BRICS Bridge, a cross-border payment solution for the economic coalition, while pushing for the de-dollarization of the global economy.

As the country attempts to skirt sanctions, the Russian government is keen to avoid the pitfalls of the increasing cryptoization of its economy, restricting digital assets to only cross-border transactions.

Watch: CBDCs are more than just digital money