Recently, Daniel Yegorov, head of the Russian Federal Tax Service, said in an interview with local media that cryptocurrencies could cause significant erosion of Russia’s tax base.

He said the agency is actively monitoring the cryptocurrency market, looking for ways to deal with the use of cryptocurrencies for tax avoidance.

Yegorov believes that cryptocurrency transactions are still traceable, and the Russian Federal Tax Service is ready to deploy an automated tracking system to process the massive data. “When you enter digital space, there must be a trail somewhere. It’s only a matter of time before that clue is confirmed.”

It is understood that the Central Bank of Russia is assisting the tax authorities in establishing cryptocurrency taxation procedures. Previously, the Russian State Duma approved a cryptocurrency tax bill requiring residents to report cryptocurrency transactions totaling more than $7,800 a year. The central bank proposed that as part of Russia’s financial market goals for 2022-2024, “illegal digital financial asset circulation” should be brought into criminal responsibility.

Sergey Hitrov, founder of Russian cryptocurrency activity Blockchain Life, said that Russian crypto businesses could generate tax revenue worth up to $4 billion a year. He believes that local cryptocurrency traders have “completely failed” in understanding how to pay taxes on cryptocurrency transactions.

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