‘It initiated the formation of the mining industry in Russia’
Legalisation of mining and the authorisation of settlements in cryptocurrency can give impetus to economic development and improve the environment
Since September 1 of this year, cross-border settlements and exchange trading in cryptocurrency have been allowed in Russia, however, so far only within the framework of experimental legal regimes (EPR), and from November 1 — to engage in mining. The laws signed on August 8 by President Vladimir Putin legalised mining and opened up new opportunities for the development of domestic businesses, Realnoe Vremya experts believe. Read the details in the material of Realnoe Vremya.
Experiment with cryptocurrency calculations
Federal Law No. 223-FZ dated August 8, 2024, “On Amendments to Certain Legislative Acts of the Russian Federation” have given the Bank of Russia the authority to establish experimental legal regimes in the field of digital innovations for transactions with digital currencies within the framework of foreign trade activities, as well as for the purpose of conducting organised digital currency trading. At the same time, the Bank of Russia has received the functions of an authorised and regulatory body for EPR issues in this area.
The Bank of Russia will establish experimental legal regimes in the field of digital innovation and approve programs of experimental legal regimes in the field of digital innovation, as well as suspend, terminate experimental legal regimes in the field of digital innovation, suspend and terminate the status of subjects of experimental legal regimes in the field of digital innovation. The programs of the experimental legal regime in the field of digital innovations will provide for the procedure for admission (termination of admission) of digital currencies as a commodity to organised auctions and requirements for organisers of digital currency trading.
The experimental legal regime programs will also provide for the specifics of using digital currency as a means of payment under foreign trade agreements (contracts), the rights and obligations of residents and non-residents when they carry out currency transactions with digital currency, the rights and obligations of currency control bodies and agents.
In addition, the Bank of Russia is given the right to establish requirements for the operator's activities in providing settlement services for transactions with digital currency based on the National Payment System.
Legalisation of mining under strict conditions
With the entry into force of federal Law No. 221-FZ dated August 8, 2024 “On Amendments to Certain Legislative Acts of the Russian Federation”, both individuals and legal entities will be able to engage in cryptocurrency mining. Individuals will be able to engage in mining without being included in the register if they do not exceed the energy consumption limits set by the Russian government, legal entities — only if they are registered in the register of the Ministry of Digital Development. Mining regulation will be carried out by the government of the Russian Federation in coordination with the Central Bank.
The law establishes the procedure for maintaining a register of persons engaged in mining digital currency and operators of mining infrastructure. Decisions on banning mining in certain regions or in their individual territories will be made at the level of the government of the Russian Federation. Requirements are being introduced for the business reputation of persons engaged in mining — this type of activity will be prohibited, in particular for persons convicted of economic crimes.
At the same time, it is prohibited to advertise digital currency, offer an unlimited number of people digital currency, goods, works and services aimed at organising its circulation. It also introduces a ban on combining mining with certain types of activities: transmission, production, purchase and sale of electricity, operational dispatch management in the electric power industry.
The law also provides for the possibility of applying for foreign digital rights in the Russian Federation and Russian digital rights abroad.
“This will give a boost to the domestic economy”
According to Sukhar, there are flaws in the law: if someone plans to create their own cryptocurrency, they will need to legalise it, but the mechanism of such legalisation has not yet been worked out. There are issues from the point of view of the tax base that require additional clarification, he says.
“But in general, the adoption of this law gives an impetus to the creation of new energy generators and new environmentally friendly ways of extracting energy," the interlocutor of Realnoe Vremya is convinced. “For example, if a lot of oil gas is being burned for nothing now, then now they will try to use it to obtain cryptocurrency and minimise emissions, which will benefit the environment.”
When asked by Realnoe Vremya whether the legalisation of mining threatens to oversaturate the cryptocurrency market and another financial crisis, Roman Sukhar answered in the negative: the possibilities of obtaining cryptocurrencies are as limited as the gold reserve. As well as the question of whether the legal production of cryptocurrencies will not be unprofitable for Russians, given that the same Chinese who have been mining for a long time already and successfully get Russian energy much cheaper than Russians:
“One of the significant components of the cost of energy is the cost of its delivery to the consumer. If industrial mining develops, then miners will probably want to build energy-intensive data centres, maximising the use of available electrical power and minimising energy delivery costs, that is, in the vicinity of energy-generating enterprises. And the fact that we are embarking on the path of mining management from the point of view of the law will give an impetus to the domestic economy and, most likely, to the development of interaction in this regard in the global market.”
“Accounting and taxation of transactions with cryptocurrencies will be challenging”
In her opinion, the creation of a new mechanism and clear rules for accounting and collecting taxes from persons engaged in mining will require time and resources, but there should be no new opportunities to avoid taxes with the legalisation of cryptocurrency mining. The requirement of the law in relation to the “producers” of cryptocurrencies, providing for their registration in the register of the Ministry of Digital Development, excludes it in advance:
“It is almost impossible to get into the registry without a preliminary check. And it is likely that effective control and monitoring measures will be developed to prevent such actions.”
Albina Gubaidullina refers to the undeniably positive aspects in settlements in cryptocurrency, the fact that it is now possible to make cryptocurrency transfers between countries without having to use traditional banking systems and use cryptocurrency to attract investment. The economy will benefit, she says, from the emergence of an alternative to traditional currencies, and the preservation of capital in it, and the associated attraction of foreign investors interested in the Russian market.