Bitcoin Forum

The Central Bank of Russia has been asked to follow Japan’s example on legalizing bitcoin by a prominent Russian politician.

Russian Central Bank Learns About the Japanese Model

Boris Titov is a Russian politician and the Presidential Commissioner for Entrepreneurs’ Rights. In a letter to the head of the Russian Central Bank Elvira Nabiullina, he proposed that the bank follows the Japanese model in regulating digital currencies like bitcoin and ether, reported the Russian business daily Vedomosti on Friday.

Titov pointed out that Japan has recognized digital currency as a means of payment, not as money. He then outlined three outcomes of the Japanese regulations applicable to Russia.

Firstly, cryptocurrency exchanges are now regulated in Japan. They are required to register with the government as well as implement strict anti-money laundering (AML) and know your customer (KYC) measures. For example, they must regularly monitor and report any suspicious activities to the authorities, Titov explained.

Secondly, he noted that the regulations are imposed on the management of assets, and the exchanges are subject to regular audit by the financial authorities. This is to protect cryptocurrency-using customers. “Japan has also introduced procedures for dealing with claims,” he added.

Thirdly, he conveyed that Japan has removed VAT on purchases and sales of digital currency but not VAT on purchases. However, he noted that the Japanese National Tax Agency has not yet clarified how to deal with income tax or corporate tax levied on digital currency transactions.

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If Russia legalizes Bitcoin, then it will be huge. Historically, Russia has been one of the most important outposts, as far as BTC is concerned. Even now, a large part of the Bitcoin-based ventures (exchanges, gambling sites, investment markets) are based in Russia and the other Russian-speaking countries (such as Moldova and Ukraine).