The world is still undecided on what to do with the cryptocurrency industry. Response has been varied from region to region. While China has taken a hard-line stand banning all ICOs and cracking down on major exchanges, other countries such as Russia are leading the way by in all name accepting the industry as a financial market to reckon with, with regulators proposing the taxation of cryptocurrency activities in the very near future.
This is not the first indication of Russia’s intent to embrace the revolutionary blockchain technology; just recently President Vladimir Putin was in the news for backing one of many ICOs in the country using the Ethereum blockchain.
After a meeting with the President regulators announced that the finance ministry intends to create a registry documenting all cryptocurrency miners in the country with a view to tax their sizeable income. Chairman of the Financial Markets Committee Mr. Anatoly Aksakov stated the government’s intention to track down all cryptocurrency mining operations in the country using the electricity consumption of the mines to help the government pinpoint their locations.
Mr. Aksakov in a news conference said the government intends to properly identify the cryptocurrency industry as either a commodity or a financial instrument, which will then determine how the taxation will come into play. He also stated that the government intends for all cryptocurrency mines must be licensed in order to legally operate. This he says will help the government not only gain a new source of revenue but also help prevent money laundering in a notoriously anonymous industry that has so far evaded regulatory scrutiny.
Cryptocurrency market has a capitalization of over $200b, with tens of billions of dollars raised this year alone in fresh funding. Some ICOs have been labeled as either fraudulent or prone to theft from hackers, which has increasingly been a source of worry for governments around the world. Although it is highly unlikely that China’s hard-line approach will have any long-term effect on the industry, only time will tell if Russia’s embracing one will be the standard model for other countries to emulate.