Lawmakers will make a decision on the draft document regulating cryptocurrency mining in the country later next year. The bill which seeks to set rules for creation and sale of crypto tokens within the country was expected to go into effect on January 1, 2023, following a vote held in the parliament in December.
In an interview given to local business news portal RBC, Financial Market Committee chair Antoly Aksakov said that members of the State Duma – Russia’s lower house of parliament, will review and vote on the draft bill that was designed to legalise and regulate cryptocurrency mining in the country next year. The lawmaker who is actively involved in the process of legalising issuance and use of crypto assets within the country explained that the decision on the proposed legislation was delayed due to it requiring further approval from other members of the parliament.
The Russian Federation already considers digital assets as financial products after it enacted a law legalising them last January. Since the existing bill only partially regulates cryptocurrencies, the Financial Markets Committee proposed a few amendments to the draft that was aimed at better regulating the sector.
The committee noted that Russia has a competitive edge over its rivals when it comes to crypto mining due to it having cheaply available power, and year round cold weather that is optimal for running energy-intensive Bitcoin mining rigs. Mining is one of the fastest growing new sectors in Russia as it provides an additional source of income to many households especially in the energy-rich regions.
Russia has the largest natural gas reserves, second largest coal reserves and the eight largest oil reserves. The country is also one of the world’s largest exporters of fossil fuels.
The draft for legalising crypto mining was initially rejected by the Duma’s legal department which insisted that the financial committee must first consult the central bank regarding the matter. The Bank of Russia (CBR), who has always maintained a strong stance on crypto even calling for a complete ban, is the hardest government body to be convinced. However, the monetary authority supported the bill under the condition that crypto tokens minted in Russia will be sold abroad or only under special legal regimes within the country. In the case where the tokens are exchanged domestically, it should happen exclusively through licensed crypto exchanges “in a controlled regulatory environment”.
“We allow the possibility of lifting such restrictions within the framework of experimental legal regimes, provided that transactions with cryptocurrencies are made through an authorised organisation,” said a representative for the central bank.
Lawmakers are against the idea of using cryptocurrencies as legal tender in the country and the draft proposed by Aksakov even prohibits the use of digital tokens as a means of payment within the Russian Federation. Considering the effects of economic sanctions imposed on the country by the west in relation to its conflict with Ukraine, the bill’s suggestion to use cryptocurrencies for cross-border settlements is gaining traction among officials in both houses of the parliament.
The amendment will also limit advertising or other forms of promotions of crypto assets and services to an unlimited audience within the country. The ban is aimed at promotion of products and services linked to the issuance and circulation of cryptocurrencies. Crypto mining activities are excluded from the ban.
The Financial Market Committee of the Duma headed by Aksakov approved the new crypto bill and proposed its enactment upon first reading that was held earlier this month. Meanwhile, the central bank’s proposal to establish “experimental legal regimes” in the country to test cryptocurrency payments needs to be filed in the parliament in a separate bill, and is yet to be considered by lawmakers.