Russia’s Ministry of Finance has reportedly finalized its cryptocurrency regulation bill and is ready to apply it soon. The legislation particularly touches upon digital asset mining as experts believe it will create new opportunities for participants. On the other hand, it might drive investors to “the black market.”
It’s high time for some clarity
Russian authorities have been undecided on how to regulate the local cryptocurrency sector. In early 2022, the country’s central bank (notorious for its anti-crypto stance) proposed to implement a blanket ban on all attempted digital assets inside Russia’s borders.
The Ministry of Finance and President Vladimir Putin did not support the idea. The former suggested that imposing a regulatory framework on the industry is a better step, while Russia’s leader argued that crypto (especially mining) could provide certain benefits to his country.
Months passed and the institutions struggled to find a consensus. It is also safe to assume that the government’s attention must have primarily turned to the ongoing military conflict, leaving the issue of crypto regulation unresolved.
According to recent coverage, though, Russia’s Ministry of Finance has formulated the final outlook of the legislation. It introduces a wide range of requirements for identification, accounting, and certification policies that need to be completed by crypto investors:
“According to the bill, digital currency can be accepted” as a means of payment that is not the currency unit of the Russian Federation “, as well as an investment, while there should be no person obligated to him.”
Additionally, crypto exchanges operating within the bill’s jurisdiction can be trading platforms with a capital of at least 30 million rubles ($366,000), while crypto auctions can be organizations with holdings of not less than $1.2 million. Both entities will have to present annual reports on their activity, pass internal control and audit requirements, and create a separate structural unit.
Only companies based in Russia can apply for the role of Digital Asset Operators. Foreign organizations will need to obtain a license to operate in the Russian Federation and form a subsidiary.
Chen Limin – CFO at ICB Fund – believes the world’s largest digital asset trading venue – Binance – could receive a green light to settle in Russia. Interestingly, CZ’s company has already displayed its intentions to expand to the country.
What about crypto mining?
It is no surprise that the primary focus of the legislation is enforcement of regulations in the digital asset mining industry since Putin finds the niche useful. Moreover, Russia is among the world leaders in cryptocurrency mining in terms of global hash rate, behind the United States and Kazakhstan.
In its most recent bill, the Finance Ministry said miners will have to submit their application in a relevant register as the government will provide the necessary data centers for that. Taxation will be set separately:
“Finally, for the first time, the draft law examines in detail the mining process that legal persons and individual entrepreneurs will be able to carry out after being registered in the corresponding register.”
Mikhail Uspensky – blockchain lawyer – believes these steps will “somehow take this under control” and remove crypto mining from the gray market.
