Regulation
Russia Legalizes Cryptocurrency Mining as Global Sanctions Roil Traditional Finance
The Russian government on Tuesday passed two laws legalizing virtual currency mining and paving the way for the central bank to use cryptocurrencies in international payments.
The lower house of the Russian parliament, the State Duma, has approved cryptomining for legal entities and entrepreneurs. Those interested must submit their information to the relevant Russian agencies so that it can be traced, according to the new rules.
Individuals who stay within the energy limits set by the government can mine without registering. The government may also ban mining in some regions of Russia.
Under the law, miners will be required to report their activity to the local financial monitoring service and provide their wallet addresses to Russian security services.
A separate bill on cryptocurrencies, due to come into force in September, would allow Russia’s central bank to create an “experimental” infrastructure for using cryptocurrencies in cross-border payments. Under current rules, using digital currency for payments is prohibited in Russia.
The new cryptocurrency regulation comes as global sanctions imposed on Moscow following its invasion of Ukraine continue to weigh on the Russian economy. Sanctions isolated Russian companies have abandoned the global dollar system and forced the Moscow Stock Exchange to stop trading in US dollars and euros.
One of the authors of the cryptocurrency bill, Anton Gorelkin, who serves as vice-chairman of the information policy committee, She said that Russian authorities view cryptocurrencies “primarily as a tool for evading sanctions.”
Russia’s attitude towards cryptocurrencies has evolved over time, and earlier this month Russian President Vladimir Putin called digital currencies “are a very dynamic and promising direction of the modern economy.”
“It is important for us not to miss the moment and to timely prepare the legal framework and regulation, develop infrastructure and create conditions for the circulation of digital resources, both within the country and in relations with foreign partners,” he added.
Many limitations still impede the growth of the local cryptocurrency industry. The new law will not lift the existing ban on cryptocurrency payments within Russia. Additionally, advertising of cryptocurrencies and companies offering cryptocurrency services remains prohibited in the country.
Putin too blamed cryptominer earlier this month over electricity shortages in Buryatia and the Irkutsk region. The Russian Energy Ministry even proposed increasing miners’ fees five to ten times to avoid a deficit.
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