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Russia Debates Stricter Cryptocurrency Regulations Amidst Economic Challenges
In a move to tighten control over the cryptocurrency sector, Russia is contemplating stringent regulations that have historically eluded governmental oversight.
Currently under discussion in the State Duma, Russia’s lower legislative body, is a bill aimed at establishing firm cryptocurrency controls. Set to take effect on September 1, 2024, the legislation mandates a strict prohibition on establishing cryptocurrency operations, with notable exceptions for licensed miners and projects sanctioned by the Russian central bank.
Under the proposed law, only Russian businesses and individual entrepreneurs listed in a special registry will be permitted to engage in cryptocurrency mining. Private individuals may also mine cryptocurrencies, provided they comply with government standards on energy consumption, potentially discouraging extensive mining operations.
The proposed regulations also extend to banning advertisements for digital currencies and organizing their distribution.
Crypto miners will be obligated to report the total amount of cryptocurrency mined and the addresses where these assets are stored to the tax authorities. This measure aims to thwart the use of cryptocurrencies in illicit activities such as money laundering and terrorism financing. Additionally, the government could enforce a complete ban on cryptocurrency mining in certain regions.
In 2023, the Ministry of Finance had proposed banning the organization of cryptocurrency operations except for stablecoins and transactions by miners. This proposal faced resistance from the FSB and the Investigative Committee, delaying its progress.
Introduced some time ago, the bill had initially seen limited urgency among lawmakers. However, with escalating issues in international settlements due to sanctions following the onset of conflict in Ukraine, Russian authorities are now prioritizing the regulation to better control the circulation of cryptocurrencies.
The bill is expected to pass by the end of the State Duma’s spring session, as affirmed by the finance ministry, the central bank, and the national financial monitoring service.
The introduction of a registry for crypto miners is anticipated to benefit power companies that have faced difficulties proving that cryptocurrency mining in Russia serves commercial purposes. However, restricted access to affordable electricity might compel some miners to cease operations or relocate.
Recently, Russian officials announced plans to prosecute individuals who illegally tap into the national power grid for crypto mining, with penalties mirroring commercial rates typically reserved for industrial users. This initiative aims to mitigate power disturbances in residential areas caused by unauthorized mining activities.
Additionally, a Russian lawmaker on April 27 clarified that the country does not intend to completely ban crypto transactions, criticizing media for misleading reports.
This forthcoming legislation represents a significant shift in Russia’s approach to managing cryptocurrency activities, reflecting a broader trend of countries seeking to regulate digital currencies more tightly.
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