The changing geopolitical and economic climate, as well as persistent differences between responsible government institutions, are hindering the progress of legislation designed to regulate cryptocurrency mining in Russia. According to a report quoting industry watchers, these factors are holding back the progress of the required legislation.
Two draft laws on mining awaiting approval by the Russian government
Despite the latest market downturn, mining of cryptocurrencies in Russia continues to expand, the crypto page of Russian business news portal RBC noted in an article. The vast country, which was ranked fifth among mining sites at the beginning of the year, offers abundant energy resources and suitable climatic conditions.
A recent report also showed that the consumption of electricity to Russian mining farms has increased by almost 20 times over the past five years. With 1.25 gigawatts burned last year for the production of bitcoin (BTC) alone, the amount of energy used in the crypto mining industry is already comparable to the energy required in the country’s agriculture sector.
However, the lack of regulation means that digital currency withdrawals are still taking place in Russia’s gray economy. Two dedicated bills have been drafted to legalize the mining business, but they still need to be approved by the government before lawmakers have the opportunity to consider them.
The first draft legislation was filed in April this year by the New People Party in the State Duma, the lower house of parliament. But the draft law was withdrawn after the House Legal Department gave it a negative assessment. The following month, the liberal faction resubmitted a revised version but it was again rejected.
Meanwhile, another piece of legislation was developed by the executive power. According to lawyer Alexander Sharapov of the KSK Group consulting firm, the bill has better prospects as it was prepared with the help of the finance ministry. At the same time, the Central Bank of Russia (CBR) opposes the legalization of most crypto-related activities suggested by the party and the ministry, and proposes a blanket crypto ban, the legal expert pointed out.
Efim Kazantsev, an expert at the Moscow Digital School, stressed that the mining law has not yet been adopted, mainly because the various Russian authorities do not have a unified position on the matter. He said it could take a long time to create a set of rules that would suit all interested government bodies and noted that earlier this year President Vladimir Putin urged the CBR and the government to reach a consensus on crypto regulations, While highlighting Russia’s competitive advantages as one. mining destination.
Kazantsev also thinks that the most likely scenario is the adoption of a comprehensive bill like the Finance Ministry’s draft law “On Digital Currency”. “It makes no sense to adopt separate laws dedicated exclusively to mining. It is necessary to regulate both mining and the circulation of cryptocurrency. In fact, substantial issues have accumulated that require legislative solutions,” he remarked Of.
Changing environment for miners may require amendment in upcoming legislation
Writers of mining law may also have to update their proposals in response to the changing business environment. According to Yuri Brisov, founder of LFCS Legal Support, the bill drafted by the New People Party does not take into account the new conditions for miners as a result of sanctions imposed on the conflict in Ukraine. Big mining companies like Bitriver have already been hit by the fines. He believes lawmakers should introduce tax incentives for the sector.
According to Daniil Gorkov, a lawyer for the criminal defense firm, the lack of a legal definition for cryptocurrencies is a major problem that concerns the legal status of mining. He says this is the main reason mining is not yet regulated. The Law on “Digital Financial Assets”, which came into force in January 2021, refers only to “digital currency” and while some authorities have indicated that the term includes cryptocurrencies in a broader sense, it is primarily associated with a specific issuer. With refers to digital coins and tokens. as a legal entity.
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