Russia Regulates Crypto Mining and Digital Assets
Russia's new law on digital assets requires miners to register, adhere to energy limits, and bans those with criminal records, while also prohibiting crypto ads.
Russia has enacted a new law to regulate cryptocurrency mining and digital assets, effective 10 days after its publication. This legislation requires miners to register and follow energy usage limits and imposes several restrictions on who can mine.
The bill, introduced by Anatoly Aksakov in November 2022, faced delays due to disagreements but was finalized in April 2024 and passed its first reading on July 24, 2024. The new law specifies that only companies and individual entrepreneurs registered in Russia can mine. Home miners are exempt from registration if they comply with government-set energy limits.
Miners with criminal records for economic crimes, or those listed under Federal Law No. 115-FZ, are prohibited from mining. The government can also ban mining in certain regions to control energy consumption.
Miners must report their earnings and wallet addresses to an authorized body, with the frequency set by the government. The Federal Financial Monitoring Service will monitor addresses involved in illegal activities. Non-compliant miners risk being disconnected from the power grid and facing legal action.
The initial law banned the use and sale of mined cryptocurrency in Russia, but this restriction was removed. Russian platforms can now trade foreign digital financial assets (DFA) under Central Bank oversight. The bank can ban specific coins if they threaten financial stability. Advertising cryptocurrency and related services is prohibited to protect the public from high-risk investments.
The State Duma Committee on the Financial Market approved draft law No. 341257-8 in its third reading. Initially focused on crypto payments in foreign economic activities, the revised law empowers the Central Bank to set rules for trading digital currencies within this experimental framework.
The Russian Central Bank has traditionally opposed crypto assets. However, external pressures are causing a shift in their stance. As reported earlier, El Salvador proposed using cryptocurrency, possibly Bitcoin, to address trade challenges with Russia. This proposal is part of El Salvador’s strategy to strengthen economic ties with Russia.
Alexander Ilyukhin, first secretary of the Russian embassy in Nicaragua and head of the office in El Salvador, shared this initiative. He noted El Salvador's early adoption of Bitcoin as a legal tender. "Within the country, any tourist can pay for services with Bitcoin. However, in our country, Bitcoin is not widespread, so we seek other ways to enhance trade. El Salvador is ready to continue economic cooperation with Russia," Ilyukhin said.
El Salvador maintains an independent foreign policy, avoiding taking sides in the Russia-Ukraine conflict. While Ukraine has sought El Salvador's support, Ilyukhin stated they have not succeeded. El Salvador is also considering joining the BRICS economic bloc, which includes Brazil, Russia, India, China, and South Africa. BRICS is actively pursuing de-dollarization, using cryptocurrencies as an alternative to the US dollar.
Russia’s new digital asset law is a significant step in regulating its cryptocurrency industry. With strict requirements for miners, bans on those with criminal records, and detailed reporting obligations, the law aims to create a controlled environment for digital assets. The evolving stance on cryptocurrency, influenced by external proposals like El Salvador's, highlights the dynamic nature of the global crypto landscape. As Russia navigates these changes, balancing regulation and innovation will be crucial for the future of digital assets in the country.
