As a seasoned crypto investor with roots deeply entrenched in the Russian market, I find the recent regulatory developments surrounding cryptocurrency mining both intriguing and somewhat perplexing. Having navigated the crypto landscape during its early days of anarchy and now witnessing the gradual emergence of formalized regulations, it’s a bit like watching a chess game where the pieces are still finding their places on the board.
The Russian leader, Vladimir Putin, has officially approved a series of bills that establish rules governing the practice of cryptocurrency mining within Russia’s borders.
While the law clarifies essential terms related to cryptocurrency mining, industry professionals warn that Russia hasn’t entirely “authorized” cryptocurrency mining yet. Rather, they view these regulations as setting up a system of fresh rules and limitations for the crypto mining industry.
Understood as of August, a new law was enacted, defining crucial terms such as mining and mining pools within the industry. This legislation mandates that mining companies register and report their activities. The law further bars foreign entities from engaging in mining within Russia’s borders, while granting the government discretion to limit mining activities in specific regions if necessary.
On October 25th, Putin enacted a law that establishes guidelines and regulations for mining activities and the circulation of digital currencies. This law will become enforceable on November 1st, 2024; however, its key provisions are scheduled to take effect in March 2025.
“No clear regulations are introduced”
According to Nikita Zuborev, the head analyst at BestChange’s local exchange directory, the enacted laws in Russia have not yet completely legalized cryptocurrency mining.
In the interview with CryptoMoon, Zuborev stated that while there hasn’t been full legalization of mining, regulations have been set up by law to streamline the oversight and management of industrial-scale mining operations.
Zuborev pointed out that this structure lays down the duties and responsibilities for both corporations and regulatory bodies, encompassing guidelines on electricity usage and tax rates. Yet, it’s the relevant ministries who will decide exact tax amounts and energy limitations, according to him, further mentioning:
“No new clear regulations are introduced, it only paves the ground for more precise taxation. Earlier, all miners paid at the rate of hosting providers, and now payment in correlation with the mined amount is introduced.”
Maria Agranovskaya, a specialist in international law and fintech who is also an attorney, mirrored Zuborev’s remarks. She highlighted that before the enactment of the legislation, Russia’s major mining firms had been functioning legally.
Agranovskaya explained to CryptoMoon that while the act (law) didn’t explicitly make mining legal, it certainly provided much needed clarification on the legal aspects.
Mining is no longer in the “gray area”
As a researcher, I’ve observed that the recently implemented laws have effectively addressed the “legal gap,” a term often used by me in my professional capacity as a legal expert at KKMP Legal, alongside my esteemed colleague Anna Maximenko.
Prior to the enactment of specific regulations, Russian miners found themselves in a situation where their activities were not explicitly forbidden but ambiguous, often referred to as operating within a “grey zone.” This lack of formal restrictions, however, sparked debates regarding the nature of mining as an economic activity, electricity bills, and other related matters.
Maximenko pointed out that while miners enjoyed a certain degree of liberty due to minimal oversight, they simultaneously encountered operational difficulties. He further noted that cryptocurrency mining in Russia has been prevalent since 2017.
Mining restrictions and prohibitions
When establishing the legal and regulatory framework for cryptocurrency mining activities, the recently enacted crypto mining laws in Russia have imposed several limitations, one of which is barring non-resident individuals from engaging in mining within the country.
According to the law, entities or individual entrepreneurs involved in the power industry sectors like transmission, generation, selling, buying, or managing operational power dispatch are prohibited from mining activities, as pointed out by Maximenko.
Additionally, this law empowers the government to prohibit mining operations in areas prone to electricity outages or scarcity.
According to Maximenko, it’s likely that we’ll soon see a confirmed list of these regions. At present, it appears that the Far East, South-Western Siberia, and the Southern region of Russia are included in this list.
A prior law enacted in August also bans the public display of ads promoting cryptocurrency services. In simpler terms, this means that it is against the rules to publicly show advertisements for products or services related to cryptocurrencies.
“In the Russian Federation, it is prohibited to offer digital currency to an unlimited number of persons, as well as goods (works, services) for the purpose of organizing the circulation and (or) circulation of digital currency.”
Although crypto advertisements are banned, the government permits users to buy, store and sell cryptocurrencies through exchanges and wallets. However, no crypto exchange is officially registered in Russia at this time.
How to legally sell mined coins?
In Russia, the recently implemented mining laws don’t offer clear guidelines about how digital assets gained from mining can be legally sold, since this matter is not mentioned in the existing legislation.
Maximenko mentioned that it could potentially fall under the upcoming regulatory acts, set to be enacted during the law’s implementation,” (when speaking to CryptoMoon)
A lawyer pointed out that when it comes to digital currency exchanges, there’s a lack of clarity in the law because while there aren’t any specific bans on cryptocurrency transactions, neither are they explicitly allowed.
The lawyer suggested a cautious stance, indicating that these types of transactions should initially be allowed under trial programs only.
“The correct interpretation will evolve as the practice of application of the law develops.”
In recent times, Russia has seen advancements in the regulatory landscape for crypto mining, following the enactment of its initial cryptocurrency legislation, “On Digital Financial Assets,” back in 2021. This law recognized digital currencies, including Bitcoin (BTC), as legitimate entities but disallowed their usage as a means of payment.
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2024-11-01 11:58