The Russian Federal Taxation Service (FTS) is actively monitoring the cryptocurrency market to foreclose tax evasion, FTS head Daniil Egorov said.

Cryptocurrencies can potentially crusade "pregnant erosion" to Russia'southward tax base, Egorov argued in a Monday interview with the local publication RBC.

Only cryptocurrency transactions are still traceable and should exist reported, the official said, adding that the FTS is ready to deploy automated tracking systems to process big data volumes.

"When y'all become into the digital space, you still get out a trail somewhere. And it'due south a matter of fourth dimension before this trail is identified," Egorov declared.

The official besides noted that the FTS is now coming up with ways of responding to crypto tax evasion practices as the authority looks to adjourn such activity rather than just to identify it. "We would like to find solutions that shut down a problem as a miracle rather than only identifying actions by a specific actor," Egorov added.

The news comes shortly after the Banking concern of Russia last week proposed to innovate criminal liability for "illegal apportionment of digital financial avails" as function of the state'south financial market goals for 2022 and the menstruum of 2023–2024. As part of the proposal, the central bank is looking to institute the cryptocurrency taxation procedure.

The Russian State Duma approved a bill on cryptocurrency taxation in the first reading in Feb 2022, requiring residents to study crypto transactions of a total amount exceeding $seven,800 per year. In order to move forward with the second reading, lawmakers decided to assign a responsible committee, the State Duma Committee on Budget and Taxes, in mid-October.

Co-ordinate to Sergei Khitrov, founder of the Russian cryptocurrency event Blockchain Life, Russian crypto businesses could potentially generate as much as $4 billion worth of taxes per year. According to him, the local crypto customs has and so far demonstrated a "complete failure" to sympathize how to pay taxes on crypto.

Related: Firm passes $1T infrastructure bill with crypto tax for Biden'south approval

The news comes every bit American lawmakers fight dorsum confronting changes to tax reporting rules for crypto transactions over $10,000 in the newly passed infrastructure neb. The bill was initially canonical by the Senate in August, which was met with a proposal for a compromise amendment by a group of six senators, including pro-Bitcoin (BTC) Senator Cynthia Lummis