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Russian lawmakers are ready to legalize the country’s burgeoning industrial crypto mining sector, but could impose strict restrictions on “private” miners at home.
As the media Finam and RBC report, the deputy chairman of the State Duma Committee on Information Policy, Anton Gorelkin, confirmed that the State Duma will consider a new mining law during the current session.
Russian law set to change country’s crypto mining sector?
It appears that the mining law will be bundled with a proposed crypto regulation that would effectively ban the operation of crypto exchanges in Russia.
Certain exceptions are made for companies operating in a sandbox supervised by the central bank.
However, the bank appears to have made this concession exclusively for international trading companies that use cryptocurrencies instead of USD in international trade transactions.
Industrial miners may also gain access to these Moscow-controlled exchanges under the new proposals.
Gorelkin explained that the new bill stipulates that “only Russian companies and businessmen who have received a permit” will be allowed to continue mining.
Lawmakers have already said they hope the law will be passed in the coming weeks and come into force on September 1.
Approval system to be introduced
Gorelkin added that “individuals who do not exceed the energy consumption limits set by the government” will be allowed to mine coins “without applying for a permit.”
This would be a step backwards from previous efforts to ban all forms of non-industrial crypto mining.
However, it remains to be seen what the proposed caps on energy consumption will look like. Russian energy providers have cracked down on illegal mining activities in recent months , suggesting that the tolerance threshold for private miners is already low.
Industrial miners will also be required to submit reports on their activities to Rosfinmonitoring, the Russian anti-money laundering agency.
Should overseas crypto exchanges play a role?
Interestingly, Gorelkin also commented that industrial miners would be allowed to sell coins “without using the Russian information infrastructure.”
This could be a nod to overseas crypto exchanges. Previous efforts to regulate crypto mining in Russia revolved around the idea of forcing domestic firms to sell their coins on foreign trading platforms.
The central bank believes that this policy would help keep crypto “out of the domestic economy.”
The bank has made this a priority requirement as it seeks to advance its digital ruble project.
Exclusive: As China's big banks pull back from financing Russia-related transactions, some Chinese companies are turning to small banks on the border and underground financing channels such as money brokers and banned cryptocurrency https://t.co/GLmIBNPaHR
— Reuters (@Reuters) April 29, 2024
The bill also appears to give some power to energy suppliers and local authorities.
In the past, officials in mining hotspots like Irkutsk have complained that miners are putting excessive strain on their networks.
Gorelkin explained that the proposed law “includes the possibility of giving the Russian government the right to ban mining activities in certain regions.”
However, he acknowledged that there was still much to “debate” about the possible “conditions and scope” of such “bans”.
Cryptominers rack up big B5m unpaid electricity bill https://t.co/fbR8ywG3Uc
— Malcolm Carter (@MalcolmThailand) April 29, 2024
Experts uncertain about new law
Russian legal experts expressed mixed opinions on the news. RBC quoted Yuri Brizov, a partner at legal consultancy Digital and Analogue Partners, as saying that lawmakers have tried to regulate mining before – and failed.
The latest attempt appears to be the result of intense lobbying by the industrial mining sector.
Russian crypto mining company BitRiver is building a new multi-million dollar data center in Russia. (Source: BitRiver)And while there is talk of the bill being passed in time for a September rollout, Brisov said lawmakers will need to revise the bill before a vote. He explained:
“This draft is already the eighth attempt to create a mining law. It is very rough, even the definition of mining is hastily formulated. The text is terrible. There is little chance that it will be adopted in its current form.”
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