Russia to crackdown on cryptocurrencies with new regulatory bill

Russia is considering a crackdown on cryptocurrencies in an effort to get control of a market that has previously operated mostly beneath the radar.

The State Duma, the lower chamber of the Russian Parliament, is now debating a measure to regulate cryptocurrencies in Russia. The document specifies a comprehensive ban on the establishment of cryptocurrency circulation as of September 1, 2024, with exceptions for officially registered miners and initiatives approved by Russia’s central bank.

According to the proposal, only Russian enterprises and individual entrepreneurs listed in a special register would be authorized to mine cryptocurrency. Private persons will be allowed to mine cryptocurrencies without being included in the registry as long as they adhere to the government’s energy consumption regulations, which may discourage them from mining activities.

The bill also forbids advertising digital currencies and the organization of their circulation.

Russian miners will now be required by law to submit to the tax office the entire amount of cryptocurrency they have mined, together with the crypto addresses to which the mined cash has been deposited.

Legislators assert that the purpose of this provision is to prevent these funds from being used “for money laundering, financing of terrorism, or other criminally punishable acts.” Additionally, authorities will have the authority to completely prohibit cryptocurrency mining in specified sections of the country.

In the summer of 2023, Russia’s ministry of finance suggested prohibiting the organization of cryptocurrency circulation, with the exception of stablecoins and the sale of coins by miners. However, the initiative was thwarted by Russia’s secret service FSB and the investigative committee.

The current law was introduced in the State Duma some time ago, but it appeared to be a lesser priority among legislators. However, Russian authorities are now racing the bill to assume control of crypto circulation in response to issues with settlements in overseas economic activity caused by sanctions imposed following the commencement of the war in Ukraine.

The finance ministry, the central bank, and the country’s financial monitoring service have all stated that the law will be passed by the conclusion of the State Duma’s spring session.

The bill is positive news for electricity companies, which have previously struggled to demonstrate that Russia-based crypto miners are utilized for commercial purposes. The introduction of the crypto miner registry is expected to resolve this issue. However, the inability to access cheap power may force some cryptocurrency miners out of business or to shift to another country.

Earlier in May, Russian authorities revealed their intention to prosecute private crypto miners who are unlawfully connecting to the national grid. According to a report, a government-appointed expert group has proposed steep fines for home electricity consumers who go over their indicated consumption.

Authorities have reportedly considered a plan to crack down on crypto miners using residential homes as a means to reduce power disruptions in specific areas of the nation. The report discloses that the penalties that will be imposed will be computed utilizing commercial rates that are typically applicable to industrial enterprises.

Meanwhile, on April 27, a Russian lawmaker clarified that the nation is not planning to outlaw crypto turnover in the country, criticizing news outlets for making sensational headlines instead of checking the facts.