Putin Legalizes Cryptocurrency Mining in Russia: New Law Sets Framework and Restrictions
Vladimir Putin made the cryptocurrencies mining legal in Russia, marking a substantial shift from past views on digital assets. l Credit: Contributor/Getty Images
Key Takeaways
- President Vladimir Putin has signed a law that officially legalizes cryptocurrency mining in Russia.
- Putin emphasized the need for a robust legal framework and regulatory guidelines to capitalize on the potential of digital currencies.
- However, there are some restrictions on who can mine digital assets.
President Vladimir Putin has signed a new law officially legalizing cryptocurrency mining, marking a historic shift in Russia’s stance on digital currencies. During the meeting, the Russian President emphasized the need for a robust legal framework and regulatory structure to harness the potential of digital resources.
The law introduces critical definitions related to mining and sets clear parameters for who can participate in this emerging sector. As the country seeks to regulate and capitalize on cryptocurrency amid sanctions, it also aims to prevent illegal activities associated with digital currencies, establishing guidelines that balance innovation with security.
Mining Allowed in Russia
In a recent meeting focused on economic matters, Putin stressed the importance of digital assets and urged the Cabinet of Ministers to swiftly establish a legal framework and regulatory guidelines. He emphasized that Russia must seize the opportunity to develop its digital resources infrastructure.
The newly signed law introduces key concepts such as digital currency mining, mining pools, and mining infrastructure operators, clearly defining mining as an economic activity rather than merely generating digital currency.
Under these new regulations, only registered Russian legal entities and individual entrepreneurs can mine cryptocurrencies. However, individuals within the government’s energy consumption limits can mine without registering.
The Cabinet of Ministers will also set specific requirements for individuals and businesses in this sector.
Control of Cryptocurrencies Use
The new regulations are designed to curb the use of digital currency for money laundering. Miners will now be required to report their methods of acquiring digital currency and provide necessary identification to government agencies.
Rosfinmonitoring, Russia’s financial watchdog, will maintain a record of users suspected of involvement in money laundering or terrorist financing.
The bill initially proposed banning the circulation of mined currency in Russia. However, during the second reading, this provision was revised to allow the trading of foreign digital financial assets (DFAs) on Russian blockchain platforms.
It’s worth noting that the Central Bank still retains the authority to ban certain issuances if they pose a risk to the country’s financial stability.
As per the new legislation, foreign digital rights will be recognized as digital rights within Russia if classified by the information system operator. The Bank of Russia can reject this classification for specific foreign digital rights and impose additional eligibility criteria.
Some Restrictions Apply
Under the new regulations, individuals with convictions for economic crimes, public administration offenses, or serious intentional crimes are prohibited from engaging in mining activities. This restriction also applies to those involved in extremist activities or who have had their assets frozen or blocked.
Legal entities will be barred from participating in mining if their founders fail to meet the required standards of business integrity.
In the meeting, President Putin highlighted concerns regarding the rising electricity consumption linked to mining operations in certain regions. To address these issues, the legislation grants the government the authority to restrict mining activities in specific areas and prohibits the integration of mining with the electricity sector.
The law aims to establish comprehensive law enforcement protocols to regulate the issuance and circulation of digital currency, as detailed in the explanatory note.
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