Russia now treats digital assets as property as CBDC faces delay

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President Vladimir Putin has signed a new draft bill into law that regards digital assets as property for taxation purposes, offering much-needed clarity to Russia’s burgeoning sector.

The law was proposed in the Lower House of the bicameral legislature—the State Duma—and lawmakers voted in favor last November 27. The Upper House, the Federation Council, voted on it the next day, upholding the Duma’s vote. It was then presented to the president’s desk for final assent, which he has now issued, making it an official law in Russia.

The law amends Russia’s Tax Code to treat digital assets as property for taxation purposes. This exempts the sector’s profits from value-added tax (VAT). However, it subjects the sector to income tax, which is capped at 13% for earnings below 2.4 million rubles ($22,400) and 15% for any earnings above this threshold.

Major multinationals and corporations must adhere to the 25% corporate tax rate. However, this only takes effect from January, while the other provisions will be enforced immediately.

The new law also mandates block reward miners to register with local authorities and report on their earnings or risk a 40,000 ruble ($380) fine.

It’s the latest of several laws by the Russian government to regulate the block reward mining sector in the country’s northern and eastern regions, which are historically colder than the rest of the country.

New mining rules were enacted on November 1, requiring miners to register with authorities and obtain an operating license. One key stipulation was new taxes, which forced over 150 miners to file applications with the Federal Tax Service. Private miners who didn’t meet a certain energy threshold were exempted.

Russia’s latest miners’ taxation framework mirrors a draft law in South Korea that also seeks to align digital assets with securities on the taxation front. However, while Russia has pushed the proposal into law in a few weeks, South Korean lawmakers are still fighting over the implementation, four years since they voted in favor of the new framework. The latest contention pits the ruling party, which wants implementation postponed until 2028, against the opposition, pushing for implementation in January next year.

Russia’s tax-focused digital asset laws aim to boost government income from the sector, which was the second largest last year after the United States. In 2023, the country reportedly collected $195 million from miners and is now pushing to collect $2 billion as the sector grows.

Rallying for a CBDC pushback

Meanwhile, the Ministry of Trade and Industry has called for a longer delay in implementing the country’s central bank digital currency (CBDC) to allow retailers to adapt, a call that has received support from local industry bodies.

Russia has been fast-tracking its digital ruble implementation over the past two years. This year, the Bank of Russia is pushing harder to ensure that the CBDC becomes part of the country’s payment rails by 2025.

Before the State Duma, one of the proposals would require major retailers whose revenue is above 30 million rubles ($274,000) annually to accept the CBDC by July next year. Retailers averaging 20-30 million rubles ($184,332-$276,498) have an extra year to comply, while those below this threshold have two years.

The ministry says this window is too small for retailers. In a response letter to Anatoly Aksakov, the head of the State Duma Committee on Financial Markets, the ministry said that retailers lack the proper infrastructure for this transition. Even if they acquired it, there isn’t enough time to stress-test it and assess any possible risks, it added, as reported by the state-owned paper Izvestia.

Retailers will need at least two more years before digital ruble payments are mandatory (which would align major retailers’ window with the smaller operation’s timeline), the ministry said. This period would allow for software updates, changes to payment rails and IT systems, and staff training.

Aksakov says the State Duma will discuss the ministry’s proposals. However, he told the paper that most major retailers will be ready to transition by July next year. After all, in pilots conducted by the central bank, over 21,000 retail outlets participated, and the payments were smooth and secure.

Local trade bodies do not share this opinion. The Association of Retail Companies agrees with the ministry that the timeline is too short for retailers and that the law could be an additional burden to most companies.

“We believe it is necessary to refrain from legislatively establishing specific deadlines for launching systems at the trade level and to provide for a transition period of at least two years, during which companies will carry out the necessary work,” it said in a response letter.

The Association of Internet Trade Companies concurs. It notes that enshrining the digital ruble in retail laws denies retailers an opportunity to freely “assess the costs of implementation time, the necessary human resources, expenses for the company, and also to understand to what extent companies are ready to implement such payments.”

But while these and other associations have opposed the implementation timeline, they have welcomed the digital ruble. They believe it could result in lower operation costs as the acquiring fees will be reduced since the CBDC will be directly processed by the central bank.

SIX Group Invests in tokenization platform OpenBrick

Elsewhere, SIX Group, the Swiss capital markets giant, has invested in OpenBrick, a Spanish tokenization service provider.

SIX invested in OpenBrick through Bolsas y Mercados Españoles (BME), its Spanish subsidiary, which owns the country’s four leading regional stock exchanges. In an announcement shared with CoinGeek, SIX revealed it had acquired a 22.6% stake in the company.

OpenBrick offers tokenization services to its clients in the real estate sector. It’s a collaboration effort between listed investment firm Renta 4 Banco, international real estate firm Grupo Lar, and ioBuilders, a blockchain services provider. It connects issuers, investors, and financial institutions with residential and commercial real estate projects whose tokenized shares can be traded in a secondary market. It also allows developers to raise funds for developing new projects by tokenizing them and issuing them as tokens.

SIX’s investment in OpenBrick will be critical for the startup’s European expansion. As the owner of BME, SIX will link OpenBrick up with Iberclear, the BME’s central securities depository (CSD) subsidiary. It expects this tie-up to allow OpenBrick to obtain a new EU license to operate a blockchain-powered trading and settlement platform across Europe next year.

SIX also operates the SIX Digital Exchange, a leading digital assets and tokenization platform in Europe. OpenBrick will likely integrate many of its products with SDX to expand its access across the region. SIX said OpenBrick will “be complementary” to SDX.

‘With this investment, SIX will position itself as a major player in the EU’s digital agenda and in the evolution of financial markets. This investment is part of SIX’s commitment to play a leading role in the future of financial markets by entering new assets and exploring the options of innovative technologies such as DLT. In this case, applied to the real estate sector, which is traditionally highly valued by investors in Spain,” commented Javier Hernani, a board member at SIX.

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