Russia legalizes the mining of Bitcoin and cryptocurrencies

Russia is actively working on creating a legal framework for dealing with Bitcoin and other cryptocurrencies. Recently, a law for the use of cryptocurrencies in international trade was passed - Blocktrainer.de reported.
Now the Russian state news agency TASS has announced that Russian President Vladimir Putin has signed a law legalizing the mining of cryptocurrencies in Russia. The Mining Act will come into force in November.

The legislation regulates access to mining, which includes both regulatory control and energy consumption management. The legislator distinguishes between larger legal entities and private individuals.

The former, namely legal entities (e.g. companies) and sole traders, must be entered in an official register in order to exercise the right to mine cryptocurrencies. The register entry primarily serves tax and regulatory purposes. This is to ensure that only monitored entities are allowed to participate in the mining process on a large scale.

Private individuals, on the other hand, can mine without formal registration, provided they do not exceed certain energy consumption limits set by the government. This means that small-scale mining activities by private individuals are restricted but still permitted as long as they do not have a significant impact on the national energy system.

The law also clarifies that mining is considered an economic activity that contributes to the turnover of a company or person, i.e. leads to revenue or income resulting from the mining process. Mining is not to be equated with the "issuance" or "creation" of the digital currency, which is defined by the protocol of the respective cryptocurrency. According to the law, the miner's reward for his work is therefore deemed to be his turnover and not the creation of new currency units.

According to TASS, the Russian market is also set to open up to digital assets from abroad. On the one hand, trading in such financial products on Russian blockchain platforms will be permitted. On the other hand, this openness to international digital assets will be safeguarded by strict regulatory measures in order to minimize the risks for the Russian economy.

For example, the Central Bank of Russia, which proposed a ban on Bitcoin and crypto mining in 2022, will be given the authority to intervene in a regulatory capacity and prevent the trading or introduction of such financial products if it believes that such products pose a threat to the country's financial stability.

The TASS article also makes it clear that the introduction and use of digital currencies in Russia is being seriously promoted at the highest political level.
Putin is said to have acknowledged at a meeting with the Russian government before signing the law that digital assets have promising economic potential. It is important for Russia to "seize the moment to immediately create the legal framework and regulation, develop the infrastructure and create the conditions for the circulation of digital assets", the report states.

The Russian leadership is therefore aware of the strategic importance of the sector. It sees the opportunities and benefits of Bitcoin and other digital currencies for the economy as well as the need for prompt action in order to take a leading role and not be left behind.

This forward-looking view has ultimately led to the introduction of clear laws and regulations for dealing with digital currencies - as is now the case with the Mining Act. In addition, further platforms and technical foundations could be created to make the circulation and trading of digital currencies in Russia efficient and secure. It remains to be seen what further steps will follow, how they will affect the sustainability of the Bitcoin network and whether a difference between Bitcoin and other cryptocurrencies will be recognized and officially enshrined in law in Russia.