Russia's State Duma has approved a new bill that legalizes Bitcoin mining in the country and authorizes the use of cryptocurrencies for cross-border payments.
The passing of the bill in question marks a significant shift in Russia's cryptocurrency policy, which until recently had been skeptical of the innovation of these digital assets. The Central Bank of Russia had even recommended banning Bitcoin mining and the circulation of cryptocurrencies, citing potential risks to the country's monetary sovereignty, stability, and the security of users and investors.
However, on July 24, the State Duma made a radical change, giving the green light to the aforementioned bill, which will come into force on September 1, regulating the cryptocurrency market and providing an alternative payment method to deal with international economic sanctions.
A radical turn in Russia's policy towards cryptocurrencies
The cryptocurrency situation in Russia has changed dramatically with the imposition of international sanctions by governments such as the United States against the Russian Federation following the conflict with Ukraine. These sanctions have made international payments and foreign trade difficult, prompting the government to look for alternative solutions in cryptocurrencies.
In this sense, Bitcoin mining represents a solution for Russia, as it allows the country's resources to be leveraged to extract value from the blockchain and, therefore, generate a new source of income.
According to the bill, which was primarily sponsored by Anatoly Aksakov, chairman of the State Duma Committee on Financial Markets, only registered legal entities and individual entrepreneurs will be able to engage in BTC mining as a regulated activity. However, natural persons without such registrations will also be able to mine bitcoins, as long as their operations do not exceed local energy consumption limits set by government authorities.
However, the law also sets out a number of restrictions on this activity. For example, the Russian news agency Novosti, known as RIA Novosti, reported The bill will require cryptocurrency miners to report to the government the crypto assets they obtain through mining activity, as well as to provide the addresses of the crypto assets they manage and a detailed record of the operations they carry out with these digital assets.
The bill will also prohibit miners from using cryptocurrencies they extract from the Bitcoin network and other blockchains as payment currencies. “At the same time, the bill prohibits the organization of circulation of digital currency on the territory of the Russian Federation, except in cases of its mining and distribution within a mining pool,” the agency reported.
Cross-border payments with cryptoassets
Regarding cross-border cryptocurrency payments, the approval of the bill highlights how these digital assets can provide an alternative solution to sanctions against Russia.
Russia is reportedly set to launch a platform for cross-border cryptocurrency payments on an experimental basis, which will operate under the supervision of the Central Bank. This crypto payment platform aims to provide an alternative payment in the face of international sanctions and facilitate foreign trade with digital assets without risking the country's financial and monetary stability.
Despite the limitations imposed by the new bill, it is generally considered an important step towards regulating the cryptocurrency market. MP Anton Gorelkin described the moment as “momentous” and stressed that it is a radical change in the country’s policy towards digital assets.
