Russian Senate Approves Cryptocurrency Mining Legislation – But Are There Implications for Bitcoin Miners?

The Federation Council of Russia has endorsed a draft legislation concerning cryptocurrency mining, indicating that this significant bill is set to become law, pending President Vladimir Putin’s approval.

While some Bitcoin (BTC) miners in Russia have expressed optimism regarding this development, others remain uncertain about its implications.

Russian Senate Approves Crypto Mining Legislation – What’s Next?

According to Vedomosti, the Federation Council has ratified the mining legislation alongside another bill concerning “experimental foreign trade settlements” in cryptocurrency.

This mining legislation will permit both “legal entities” (industrial mining companies) and “sole proprietors” (individual miners) to engage in cryptocurrency mining, contingent upon their registration in a national database.

Russia aims to circumvent sanctions with new legislation permitting crypto payments in international commerce. #crypto #sanctions #russia https://t.co/jtknNjT9iD

— Cryptonews.com (@cryptonews) July 31, 2024

This law is expected to bring significant relief to small-scale miners operating from home. Individuals will be allowed to mine cryptocurrencies as long as they adhere to “energy consumption limits established by the government.”

The legislation also grants the government the authority to impose restrictions on mining activities in “certain energy-deficient areas.”

Lawmakers anticipate that Putin will endorse the legislation, which is part of a broader package of numerous legal amendments, early this week.

Reports indicate that the law is expected to “come into effect on September 1, 2024.”

Years of Ambiguity for Miners

For several years, miners have been urging Moscow to legitimize their sector. However, a political stalemate has left them in a state of legal uncertainty.

Intensive lobbying efforts earlier this year, coupled with power shortages in key Russian Bitcoin mining regions, seem to have finally resolved the deadlock.

Last month, Putin highlighted the “urgent need” for legislative oversight of cryptocurrency mining.

The Russian President remarked that “uncontrolled growth” in electricity usage for crypto mining “could result in power shortages in specific regions.”

The State Duma reacted by expediting the bill through the legislative process, with its second and third readings completed in a single day (July 30).

The Russian parliament is scheduled to review a crypto bill alongside separate legislation on crypto mining on Tuesday. #Russia #Crypto https://t.co/QpV0tD4Lrx

— Cryptonews.com (@cryptonews) July 30, 2024

Are All Miners Content?

The legislation will establish legal definitions for terms such as “mining” and “mining pools.” It will also initiate the formation of a secondary register of “mining infrastructure operators” under the oversight of the Ministry of Digital Development.

Compliance will be enforced by Roskomnadzor, the Federal Service for Supervision of Communications, Information Technology, and Mass Media.

Lawmaker Anton Gorelkin referred to the draft laws as “historic,” asserting that they would aid in safeguarding Russians from crypto “fraud.” (Source: Anton Gorelkin/Telegram)

The legislation will also prohibit electric power companies from directly initiating their own cryptocurrency mining ventures.

Miners will be required to report all their income to the tax authorities and disclose all their cryptocurrency wallet addresses.

Importantly, both Russian miners and mining pools must sell their coins “without utilizing Russian infrastructure.” This stipulation would compel Russian miners to trade their coins on international cryptocurrency exchanges.

Concerns Over Sanctions?

This requirement may prompt responses from US and Western governments in the form of sanctions against trading platforms that engage with Russian miners.

A large vessel docked at Russia’s liquefied natural gas export facility in the Arctic at the end of last week, as per satellite imagery. https://t.co/taOoi41Rlm

— Bloomberg Markets (@markets) August 4, 2024

Nevertheless, Russian media sources have suggested that “a national exchange infrastructure” could potentially “be established” in the country in the coming months.

Forklog reported that many miners have mixed feelings about the draft law, stating:

“On one hand, the introduction of a regulatory framework will enable [miners] to optimize their operations. On the other hand, several provisions raise concerns for businesses.”

A Russian crypto mining engineer. (Source: Novaya Gazeta/YouTube)

The outlet quoted Mike Lvov, PR and Communications Director at the mining firm EMCD Tech, expressing apprehension regarding “registries” and “full reporting on cryptocurrency mining activities.” He stated:

“It is unclear what will happen with this data. How will it be processed, and by whom? How will this information be utilized? There are no definitive answers to these questions yet.”

‘The concept of Bitcoin and its design is intended to be independent from policy,’ states one crypto executive. ‘It doesn’t concern itself with who is president.’ https://t.co/z6G3fcJzkj

— Bloomberg Markets (@markets) August 3, 2024

Lawmakers in the Duma and the Russian Senate have asserted that the government and its agencies will not interfere with miners except in “exceptional circumstances.”

However, some remain skeptical and are concerned about potential increases in energy prices. Fedor Ivanov, Director of Analytics at the crypto security firm Shard, cautioned:

“First, the [new] regulation needs to [be implemented]. The industry must fully emerge from the shadows and resolve taxation-related matters. […] Only then can we begin discussing tariff increases.”

Ivanov added that “merely raising tariffs is an ill-considered approach.” The expert concluded that “pressure” on large industrial miners would “diminish Russia’s appeal” in the cryptocurrency sector.

He also noted that such actions would “not address the issues faced by” home miners and “illegal connections” to power grids.

Most analysts believe that Bitcoin constitutes the majority of the Russian cryptocurrency mining landscape, with over 90% of miners focusing on BTC.

The post Russian Senate Approves Crypto Mining Law – But Is There a Twist for BTC Miners? appeared first on Cryptonews.