Russia is poised to implement stringent regulations on cryptocurrencies as part of a concerted effort to bring the market under state control. The State Duma, the lower chamber of the Russian Parliament, is currently deliberating a comprehensive bill aimed at regulating cryptocurrency activities within the country.
Key Provisions of the Bill
The proposed legislation includes a ban on the establishment of cryptocurrency circulation effective September 1, 2024, with limited exceptions for officially registered miners and initiatives approved by Russia’s central bank. Furthermore, only Russian enterprises and individual entrepreneurs listed in a special register would be authorized to engage in cryptocurrency mining.
Impact on Crypto Mining and Taxation
Private individuals may still mine cryptocurrencies but must adhere to government energy consumption regulations. Additionally, miners will be required to declare their mined cryptocurrency to the tax office, along with associated crypto addresses, to prevent illicit activities such as money laundering and terrorism financing.
Authorities will have the power to impose penalties on violators, including the complete prohibition of cryptocurrency mining in specified regions. The bill also prohibits advertising digital currencies and organizing their circulation, with stringent penalties for non-compliance.
Response from Electricity Companies
The bill is welcomed by electricity companies struggling to demonstrate the commercial nature of Russia-based crypto-mining operations. However, some miners may face challenges due to increased regulatory scrutiny and the potential loss of access to cheap power.
Government Crackdown on Illegal Mining
Russian authorities are also cracking down on unauthorized cryptocurrency mining operations, proposing steep fines for individuals unlawfully connecting to the national grid. Plans are underway to penalize residential homes used for mining activities to mitigate power disruptions in certain areas.
Despite the regulatory measures, Russian officials have clarified that the country does not intend to outlaw cryptocurrency turnover. Criticism has been leveled against sensationalized headlines, emphasizing the need for accurate reporting on regulatory developments.
