TLDR
- Russian President Vladimir Putin signed a law legalizing cryptocurrency mining in Russia.
- The law allows registered entities and individuals to mine crypto, with unregistered miners limited by energy consumption.
- Russia aims to use cryptocurrencies for cross-border transactions amid international sanctions.
- The law will take effect in November 2024.
- Putin views digital currencies as promising for reshaping trade, banking, and international payments.
In a significant move for the cryptocurrency industry, Russian President Vladimir Putin has signed a law that legalizes cryptocurrency mining in the country.
The new legislation, set to take effect in November 2024, establishes a regulatory framework for crypto mining activities in Russia.
Under the new law, both individuals and businesses will be allowed to engage in cryptocurrency mining, provided they register with the Russian Ministry of Digital Development.
The legislation also permits unregistered individuals to mine cryptocurrencies, but only if their energy consumption remains within specified limits.
President Putin, addressing government members, emphasized the importance of this step for Russia. He stated,
“It is important for Russia not to miss the moment, set up the legal framework and regulation in a timely manner, develop infrastructure, and create conditions for the circulation of digital assets, both within the country and in relations with foreign partners.”
The law comes after months of negotiations among Russian lawmakers to establish rules and regulatory frameworks for crypto mining.
Last month, the State Duma, Russia’s parliament, voted to approve the new crypto mining bill, paving the way for Putin’s signature.
This move makes Russia one of the countries that legally allow crypto operations such as mining. The Russian government hopes to use cryptocurrencies for cross-border transactions amid the global crypto revolution and increasing adoption.
However, the new legislation has faced some criticism. Some argue that the laws are designed to discourage individuals from conducting mining operations.
Additionally, the Ministry of Digital Development will have the authority to monitor how miners adhere to the set rules and regulations.
Under the new framework, miners will be required to report the amount of cryptocurrency they mine and the addresses where it is stored to the authorities. This requirement gives the government significant control over mining companies.
The legalization of crypto mining in Russia comes against the backdrop of international sanctions imposed on the country. Since the full-scale invasion of Ukraine in 2022, Russia has become one of the most sanctioned countries in the world, with its financial systems facing significant restrictions.
In 2022, Russia was excluded from the SWIFT international payment system, which severely impacted its ability to conduct cross-border transactions.
The introduction of cryptocurrencies could potentially allow Russia to circumvent these sanctions through decentralized financial ecosystems, potentially supporting its global trade and boosting its currency.
Alongside the mining law, the Russian legislature also passed a second bill that would legalize the use of digital currency for international payments.
This bill, which still awaits presidential authorization, could further aid Russia in navigating around international sanctions.
President Putin has previously spoken about the potential of cryptocurrency mining in Russia. In 2022, he noted that the country had “certain competitive advantages” in the sector due to its surplus of energy.
