Sanctions, Disagreements Hamper Regulation of Crypto Mining in Russia, Experts Say – Mining Bitcoin News

A changing geopolitical environment and persistent disagreements between government officials are hampering progress in legislation that will regulate cryptocurrency mining in Russia. These factors, according to industry observers, are hindering progress of necessary legislation.

The Russian Government is currently reviewing two draft laws on mining

In spite of recent market turmoil, cryptocurrency mining continues to increase in Russia. This was noted by the RBC crypto page. This vast nation, which was ranked fifth in mining destinations at the start of this year, has abundant energy resources as well as favorable climatic conditions.

According to a recent report, the Russian mining industry has seen its electricity use increase almost twenty-fold in just five years. With 1.25 gigawatts burned last year for the production of bitcoin (BTC) alone, the amount of energy utilized in the crypto mining industry is already comparable to that needed in the country’s agricultural sector.

However, there is no regulation to prevent the illegal extraction of digital currencies from taking place in Russia’s gray economy. While two bills specifically designed for legalizing the mining industry have been introduced, the government must approve them before they can be considered by lawmakers.

In April of this year, the New People party filed the first draft law in the State Duma. This is the lower chamber of the parliament. The draft law was later withdrawn by the Legal Department of the House after it received a negative review. Following a negative assessment by the legal department of the house, the draft law was withdrawn. The liberal faction submitted an amended version that was again rejected.

The executive power also created another piece of legislation. Alexander Sharapov of KSK Group, a legal consultant, said this bill had better prospects because it was created with support from the Ministry of Finance. The legal expert said that the Central Bank of Russia, or CBR, opposes legalization of crypto-related activities as proposed by the Ministry of Finance and Alexander Sharapov. They propose a blanket ban on crypto.

Efim Kasantsev, an expert at the Moscow Digital School, stated that the reason no mining law was adopted so far is due to the fact that different Russian authorities have not reached a common position. He added that it may take a long time to create a set of rules that will suit all interested government bodies and noted that earlier this year President Vladimir Putin urged the CBR and the government to reach consensus on crypto regulations while highlighting Russia’s competitive advantages as a mining destination.

Kazantsev also thinks that the most likely scenario is the adoption of a comprehensive bill such as the Finance Ministry’s draft law “On Digital Currency.” “There is no point in adopting separate laws dedicated exclusively to mining. Both the mining and circulation of cryptocurrency must be regulated. Indeed, enough issues have accumulated that require legislative resolution,” he commented.

Modifications may be required for the upcoming legislation to address the changing environment of miners

Authors of the mining legislation could also be required to modify their proposals to reflect the current business environment. Yuri Brisov is the founder of LFCS Legal Support. He claims the New People party did not consider the changing conditions that miners face due to sanctions imposed in response to the conflict in Ukraine. Large mining companies like Bitriver have been affected by the penalties. He feels that the lawmakers must provide tax incentives to encourage this sector.

According to Daniil Gorkov of Criminal Defense Firm, the lack of legal definitions for cryptocurrency is still a major problem. According to Gorkov, this is what is holding mining back from being regulated. The law on “Digital Financial Assets,” which went into force in January 2021, only mentions “digital currency” and while some officials have indicated the term includes cryptocurrency in the broader sense, it primarily refers to digital coins and tokens with a specific issuer like a legal entity.

Is Russia likely to regulate the crypto-mining industry? Please share your thoughts in the comment section.

Lubomir Tassav

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.