Eastern Europe: Regulation Postponed, Tax Abandoned, Banks Enlightened
Eastern European nations have been following closely regulatory developments in the West to better understand where the wind is blowing before addressing the challenges presented by cryptocurrencies. This strategy has proved fruitless, however, as developed western countries, and international organizations, have not been able to come up with a unified approach towards regulating the crypto space. The weightlessness goes on.
Also read: US Ranked Top Destination for Coin Offerings, Majority of ICOs Identified as Scams
Russia Postpones Crypto Regulation
The adoption of the legislation meant to regulate the crypto industry in Russia has been delayed, despite President Putin’s July deadline for the legal framework. In the past weeks, Russian outlets have quoted officials expressing concerns that the draft laws introduced in the State Duma in March won’t be approved during the spring session. The three bills adopted on first reading in May were expected to pass a second vote before the parliament’s summer break.
According to Elina Sidorenko, head of the interdepartmental group assessing the risks associated with cryptocurrencies, the laws will be finalized after the Financial Action Task Force on Money Laundering (FATF) develops its standards in the field, as news.Bitcoin.com reported. The news that the legislation will be postponed until the fall was confirmed by the chairman of the parliamentary Financial Market Committee, Anatoly Aksakov, who was quoted by RIA Novosti saying:
We don’t have time during the spring session […]. The technology is rather complicated, it is largely transboundary. So, taking into account its characteristics, we wouldn’t like to write down norms that wouldn’t work. The documents will be ready by early fall. We expect the second and third reading in September.
“All this is just new for us and requires deep immersion into the features of this new technology and these new tools. Accordingly, time is needed to produce competent legal documents,” the Russian lawmaker added. As a result, the legal status of cryptocurrencies, mining, and crowdfunding in Russia remains undetermined.
Bulgaria’s Financial Regulator to Monitor the Crypto Sector
Bulgaria, one of those EU member-states that await a pan-European decision on cryptocurrencies, has not made any significant progress towards regulating the crypto space, if we don’t count a clarification notice on crypto taxation issued by the National Revenue Service some time ago. However, the recent activity in Brussels, including the adoption of the 5th Anti-Money Laundering Directive which entered into force last week, has provided enough stimulus for authorities in Sofia to do something.
The Bulgarian Financial Supervision Commission (FSC) adopted a “Strategy to Monitor Financial Technologies (Fintech) in the Non-Banking Financial Sector” (2018 – 2020). The document provides basic definitions of terms like crypto-assets, virtual currency, smart contract, blockchain technology, initial coin offering, and other.
The paper also calls for defining the requirements for a licensing or registration regime for companies offering “financially innovative products, services, and technologies,” and analyzes the need for regulations governing the outsourcing activities in the industry. The strategy speaks about setting up innovation hubs and sandboxes, as well as introducing mechanisms to manage the risks arising from innovations in the nonbanking sector.
Crypto Tax Break Introduced in Poland
Poland, which is also wondering what to do with cryptocurrencies, decided in May to temporarily freeze its plans to tax all crypto transactions. Earlier this year, the Polish Ministry of Finance announced it would impose the “Civil Law Transactions Tax” (PCC) on all purchases and sales of cryptocurrency in the country. This meant that the crypto holdings of a Polish trader could potentially melt down to zero because of the 1% tax levied at each transaction, regardless of its profitability. Regulators decided to abandon the idea until they figure out how to comprehensively regulate the sector.
The Finance Ministry decree introducing the yearlong tax break for crypto transactions entered into force on July 13. According to representatives of the Polish crypto community, the measure will normalize the situation around the taxation of crypto incomes and profits. The controversy arose from a decision by the Polish Supreme Administrative Court in March that classified cryptocurrencies as property rights, Kryptowaluty reported. As a result, the trading of cryptocurrencies under a sales or an exchange agreement was deemed to be subject to the PCC tax.
Bank Clampdown Provokes Reaction in Slovakia
Banks in Slovakia have been closing accounts belonging to crypto businesses and investors since June. According to local media, the private financial institutions have been acting on instructions from the state regulators. It’s been reported that the central bank in Bratislava has secretly sent letters to the country’s commercial banks asking them to quit providing services to crypto companies and individuals dealing in cryptocurrency.
The hostile attitude of the traditional financial system provoked a sharp reaction from the Slovak crypto community. A video uploaded on Youtube this month shows activists projecting a Bitcoin logo on the facades of major financial institutions in Bratislava, including the National Bank of Slovakia, commercial banks and payment services providers. The clip is titled “(En)light(enment) to banks”. The “Paralelná Polis” crypto association is behind the protest action against the unfair treatment of crypto businesses.
What do you think about all these crypto-related developments in Eastern Europe? Let us know in the comments section below.
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