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.”
The Russian authorities have been indecisive on how to regulate the local cryptocurrency sector. At the beginning of 2022, the nation’s central bank (known for its anti-crypto viewpoint) proposed implementing a blanket ban on all digital asset endeavors inside Russia’s borders.
The Ministry of Finance and President Vladimir Putin did not support the idea. The former suggested that imposing 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 by, and institutions struggled to reach a consensus. It is also safe to assume that the government’s focus must have switched primarily to the ongoing military conflict, leaving the question of the crypto regulation unsolved.
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 draft law, digital currency can be accepted “as a means of payment that is not the monetary unit of the Russian Federation,” as well as an investment, while there must be no obligated person in relation to it.”
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 Russian-based enterprises can apply for the role of digital asset operators. Foreign organizations will have 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.
It is no surprise that the main focus of the legislation was applying regulations in the digital asset mining industry since Putin finds the niche useful. In addition, Russia is among the cryptocurrency mining leaders in the world in terms of global hash rate, falling behind the US 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 considers in detail the mining process that legal entities and individual entrepreneurs will be able to carry out after being included in the relevant register.”
Mikhail Uspensky – blockchain lawyer – believes these steps will “somehow take this under control” and remove crypto mining from the gray market.