How Legal Entities Can Buy Cryptocurrencies

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03.06.2021 13:52
How Legal Entities Can Buy Cryptocurrencies

    There are no restrictions related to cryptocurrencies and token holding does not violate Russian legislation in 2021. However, cryptocurrencies are not adopted as a payment method or a currency.

    The lack of legal status does not mean that there are no legal bases to regulate the cryptocurrency market indirectly. Those norms are related to legal entities who decide to buy or sell virtual money.

    The legal entity activities are subject to civil and criminal code, currency, and tax regulations. Bitcoin, Ethereum and other altcoin transactions are subject to legal norms and legislature regulations as they are treated as activities aiming to get profit.

    Legal entities in Russia are allowed to buy and sell cryptocurrencies legally. However, they need to meet all regulatory bodies' requirements to avoid problems.

    How a legal entity can buy cryptocurrencies

    Starting point

    Federal tax service treats cryptocurrencies as property. Any activities with cryptocurrencies are subject to the same taxes as the activities with the company’s property. A legal entity is obliged to make a contract before purchasing any token. This agreement confirms the transaction. When a company makes payment via their account, they need to indicate that the target of this transaction is the purchase of cryptocurrency.

    P2P transactions or exchanges?

    P2p transactions are considered to be profitable as the sellers offer good prices. However, they do not provide buyers with all necessary documents to confirm the transaction. Legal entities can not make a contract with them.

    Online exchanges provide buyers with all necessary documents but the price is not favorable there. Moreover, you should keep in mind that such intermediates charge all customers with commissions.

    When it comes to the Russian cryptocurrency industry, there are only two online exchange websites that legal entities can use to conduct cryptocurrency transactions – BitokBy and HASchange.

    All transactions are conducted manually or automatically. You can get all the necessary information about the documentation that you can receive via the support service. If you choose this method, you should be aware of the maximum volumes per transaction. When choosing such a website, you need to pay attention to the cryptocurrency reserves.

    It is better to conduct major transactions on trading exchanges including CEX.io, Polonies, Kraken, Bitfinex, Bitstamp, and others. They accept legal entities and private persons from Russia. If you pick those exchanges, you can rely on average fees on account funding and market cryptocurrency prices.

    How a legal entity can buy cryptocurrency on those exchanges

    Before purchasing a cryptocurrency via this type of exchange, a company needs to fund the exchange account. Russian banks are cautious about all payments abroad. As for cryptocurrency transactions, they are under special control. The central bank and Rosfinmonitoring treat cryptocurrency transactions as suspicious that need additional checks. The banks follow all regulator’s steps even if they are in the form of a letter of recommendation.

    Banks may require additional confirming documents, stop any account transactions or even refuse any further cooperation with a company. To avoid those issues, a company can open a transit account in a foreign bank to deposit via this transit bank. This account needs to be declared at the Russian tax authority. When a company uses this account, it should also prepare all necessary reports according to the Russian legislation.

    How a legal entity can sell cryptocurrencies

    Cryptocurrency sell transactions: taxation and main points

    Buying cryptocurrencies is easier for Russian companies than selling them. Apart from doing all paperwork, legal entities have to pay taxes after the selling transaction. The tax amount is defined as the difference between the total income from cryptocurrency selling operations and the cost of buying transactions. Being a property, cryptocurrency has one significant disadvantage for companies. They need to think in advance about the taxation optimization as legal entities can legally withdraw money from cryptocurrency selling operations on their banking account only. All operations with the company’s banking accounts are surveyed by the taxation authorities. In case of tax evasion, a company may be penalized.

    Selling cryptocurrency operations regulation

    The new edition of the law on the currency regulation and control that was issued on January 1, 2020, focuses on foreign currency accounts. The company can withdraw money from its foreign account if the bank is located in a country member of FATF or OECD. This means this country provides Russian Federation with information about financial transactions. Those changes are connected to the banking account only. It is required to declare accounts in the following company types:

    1.       Credit companies including payment systems.
    2.       Professional market participants including brokers or account management firms.
    3.       Investment funds and other companies that attract financially, and manage financial assets.

    Declaration evasion is considered to be a crime. Russian financial and taxation authorities receive all information from their foreign partners about the Russian companies and personal accounts as well as all the transactions they have done. This information is provided once per year at least.

    It is necessary to prepare all documents that clarify the foreign currency earnings. It is also important to mention that premium accounts are more privileged when it comes to various services. It is recommended to use foreign accounts to sell large amounts of cryptocurrency.

    How a company can deal with special crypto exchange websites

    Legal small and large amounts of cryptocurrency selling operations depend on a certain exchange website and the rules. It is recommended to discuss the details of the transaction with the website’s administration before dealing with it.

    How a private person can buy cryptocurrencies

    Buying cryptocurrencies is easier for private persons than for companies. If you purchase any token as a private person, you don’t need any confirming document. Traders and investors can conduct transactions via p2p, exchange websites, exchanges, and even special platforms like Broex.

    Private persons can also use additional services. They are allowed to invest in tokens to earn on the price difference. Traders and investors can benefit from special Broex investment facilities. There are many interesting ideas on investing in a particular token on the Broerx.io official website. This helps you to save your time and effort on analyzing cryptocurrencies on your own.

    Buying cryptocurrencies via Broex is fast and cheap. The platform accepts VISA and MasterCard banking cards from any bank.

    Conclusion

    Legal entities are not recommended to sell cryptocurrencies on p2p websites. There will be no confirming documents when dealing with those platforms. If the amount will be higher than six million rubles, a company risks being subject to the law on money legalization.

    There are no restrictions for legal entities to buy or sell cryptocurrencies. They are all legal but they require paperwork to avoid penalties. The Russian government hasn’t done a single solution on the legal status of cryptocurrencies yet. Discussions are being conducted with the Ministry of Finances, the taxation, and other authorities. Only time will tell if the Russian legislation will be more loyal to the virtual money.

    Current legislation does not prevent companies from conducting cryptocurrency transactions. However, legal entities are to be accurate and attentive when dealing with digital currencies. Documents confirming the aim of making a transaction and the source of money are still required.

     

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