What will the law on mining and cryptocurrencies mean for Russians

In December, the State Duma of the Russian Federation may consider a bill on the regulation of mining and circulation of cryptocurrencies in Russia. What, if the law is adopted, awaits miners, reputable token owners and ordinary citizens who bought a couple of dozen bitcoins when they cost 30 rubles apiece, Moskovskaya Pravda learned from experts.

Billdesigned to consolidate in Russian legislation the procedure and conditions for the creation and distribution of crypto-currencies, was introduced to the State Duma on November 17 by a group of deputies from different factions, headed by Anatoly Aksakov, chairman of the State Duma committee on the financial market.

It is planned that the government of the Russian Federation will establish requirements for the activities of citizens and companies engaged in cryptocurrency mining in agreement with the Central Bank, and control over compliance with these requirements will be carried out by the federal executive body authorized by the government of Russia.

According to the authors of the bill, if it is adopted in Russia, it will be possible to legally mine cryptocurrencies and transactions with them, declare the income received and ensure the payment of relevant tax payments to the budgets of all levels.

It is not planned to allow selling cryptocurrency obtained as a result of mining on Russian sites, but with some reservations.

“Transactions with digital currency, one of the parties to which are persons engaged in mining activities, can be carried out using the Russian information infrastructure through an authorized organization under an experimental legal regime,” the explanatory note to the bill states.

At the same time, the restrictions associated with the purchase and sale of currency, which are in force today in the Russian Federation, will not apply to cryptocurrency.

By the way, the Central Bank supported the bill, specifying that it was prepared with the participation of specialists from the Bank of Russia. Although earlier there were many disputes about even the recognition of cryptocurrency as such.

But the “ice broke” a few years ago, and now in our country, in particular, the law “On Digital Financial Assets” is in force, which entered into force in 2021, according to which cryptocurrencies are not only recognized, but still equated to property. True, in Russia it is forbidden to pay with crypto for goods and services, but it can be sold, exchanged, invested, and even used as collateral. In 2021, they also tried to bring mining into the legal field, recognizing it as one of the types of entrepreneurial activity. Although for the owners of mining farms, and for regulatory authorities at the legislative level, there are still a lot of blank spots in this area. And, according to Anti Danilevsky, the head of Kick Ecosystem, the new law will change little in this sense.

– The adoption of the new law will not affect mining in the Russian Federation, it already exists and works. That is, this bill will have neither positive nor negative impact on the crypto industry in Russia,” says Danilevsky. – The document regulates only legal entities, and now everything is fine with them. Small miners are not subject to the law. Therefore, in my opinion, this bill is “about nothing”.

Meanwhile, according to the expert, it’s good that the authorities are introducing concepts from the cryptocurrency sphere into the legislative field, although this is clearly not enough.

“Until there are experimental zones and other “crutches”, until the tools are available to all business representatives, these legislative initiatives do not make sense,” says Anti Danilevsky.

I agree that the new law will change little, and the managing partner of GetMiner Ernest Raevsky, while noting some of its positive aspects.

— The law does not cover foreign crypto exchanges with which miners interact. Therefore, all crypto players can exhale calmly, selling, as before, crypto on foreign platforms, he explains. – The provisions of the bill will not negatively affect the mining itself. On the contrary, the activity will turn into a legal way of income, which will be taxed. This will allow the owners of large farms and mining pools to come out of the shadows and become full participants in the Russian economy.

However, according to the expert, not all crypto market players will be happy with the changes that will still take place:

— After the restrictions introduced this year, cryptocurrency has become the only tool for the uncontrolled withdrawal of funds abroad. The crypt allowed for a long time to massively evade taxes and enrich a narrow stratum of the population. Times have changed, and most likely next year the pressure on the industry will increase, with the main blow coming from crypto exchanges and exchangers. And if miners have no difficulties with tax reporting, then the desire to play “black” and find alternative ways will arise.

As for ordinary holders of cryptocurrencies, the new law, if adopted, by and large will not affect them in any way, notes Alexey Ermilov, development director of MINEPLEX and its official representative in Russia and the CIS.

“Ordinary citizens will continue to live in the ruble field, and active users of cryptocurrencies – holders, traders – know how to use foreign platforms for the circulation of digital assets in the new realities,” the expert is sure. – For new users, it will probably become impossible to register accounts on crypto exchanges in their own name, since centralized sites require verification and entering passport data. But even here there are loopholes in the form of so-called drops – accounts registered to citizens of other countries.

But as for mining, here, according to Alexei Yermilov, there will still be changes:

– With mining, the story is different – now, most likely, it will be possible to deal with it only by “specially trained people” from the list close to those who will oversee mining, and the government and the Central Bank will determine the participants in the mining pool. At the same time, mining as a type of activity is good for our country, because cheap or excess electricity needs to be used, and regulation should outline the rules of the game. In addition, the new law will allow the sale of digital assets on foreign and domestic sites, which means that it will be possible to purchase goods for rubles received as a result of the sale of cryptocurrency.

The introduction of taxation may cause the departure of many entrepreneurs from the field of mining, but along with this, new competitive participants will appear, the expert is sure.

– If the state is not interested in the ban, then with the introduction of taxes on activities, miners can receive information support from the state. This will create a general positive background around mining and cryptocurrencies, as well as generally create a trend towards the use of digital financial assets in Russia. Now our economy needs this to move away from SWIFT and form new economic relations based on the new digital economy,” notes Alexey Ermilov.

Although even here, given the current realities, difficulties may arise.

— The origin of bitcoin can be traced. It will not be difficult for knowledgeable people to determine the country where the cryptocurrency is mined, and of course, industry participants would not like to see total blocking of everyone associated with “Russian bitcoin,” says Yermilov. – Yes, bitcoin will not become a means of payment in Russia, for this they are launching a digital ruble. But in the case of international payments, cryptocurrency could solve many problems. However, it is possible that bitcoin with a Russian trace could bury the bitcoin project itself. And the mining of cryptocurrency will not be able to close the holes in the budget of our country.

Meanwhile, the cryptocurrency market is now far from being in the best condition, says Kirill Ostrovsky, an IT manager with experience in the largest companies in Russia.

— The market is going through another “crypto winter”, the strongest fall, which already happened several years ago. It is believed that this is another “cyclical” fall, which will again lead to the exit from the cryptocurrency market and the mining of small players, and the whales, having survived the fall, will skim off the subsequent multiple growth, the only question is when this will happen.

According to the expert, it becomes simply unprofitable for small players to engage in mining:

– “Private traders” with their small farms are leaving mining due to the fall in the cost of the first cryptocurrency (Bitcoin) and the cessation of Ethereum (ETH) mining after changing the consensus algorithm this fall. Industrial mining, on which the law is directed, are giants that have huge specialized premises with mining equipment in close proximity to power plants. Often they have special electricity tariffs and service conditions that make “home” mining almost unprofitable.

By the way, if anyone is interested, there are many online calculators on the Internet that allow you to quickly calculate the monthly earnings of a miner by indicating the device model and the cost of kWh of electricity in the region where the cryptocurrency is mined.

As for the sale of crypto in Russia under the “experimental legal regime”, there are still more questions than answers.

– According to the bill, the cryptocurrency obtained as a result of mining is subject to sale without the use of the Russian information infrastructure – that is, it will be possible to sell the crypt only on foreign crypto exchanges, with the exception of transactions under the experimental legal regime. What exactly is meant here is not entirely clear, I think, to both the authors themselves and the participants in the bill. Perhaps we are waiting for the creation in the Russian Federation with the support of the authorities of a crypto-exchange, as, for example, in Kazakhstan. The only argument for the creation of such a platform can be a simple withdrawal into fiat money of the income received from the sale of cryptocurrencies to local banks, says Kirill Ostrovsky.

Most likely, the initiative to create such a platform is aimed at making life easier for the same giant cryptocurrency mining companies and other major players, moreover, much will depend on the rules established by the new structure. Timofey Semyonov, CEO of Intelion Data Systems, expressed this opinion:

— The introduction of an experimental legal regime for the exchange of cryptocurrencies will, in our opinion, allow a number of Russian importing companies, which today face restrictions in payments to foreign suppliers, to facilitate their activities. On the other hand, the centralized sale of cryptocurrencies through an authorized platform may lead to the withdrawal of the sale and exchange of cryptocurrencies into a gray area. This can happen if, for example, there is only one centralized exchange with an unfavorable exchange rate.

In general, the expert called the legislative initiative of the deputies an excellent step forward.

— The main thing is that the bill formalizes crypto activities and removes mining from the gray zone, which, in our opinion, will entail an influx of large investors and structures into the industry that will be able to legally start operating in this market. After the recognition of this detail and its legislative definition, it will receive rapid development and an influx of capital, which in turn will become a potential for the economic development of related industries, Timofey Semyonov noted, adding, however, that, like any primary document, this bill is only a foundation, which can be expanded with additional definitions and regulations.

In general, it will take a long time to improve the legislation in the field of cryptocurrencies, which, despite the high volatility, are now full-fledged participants in the financial market. In the meantime, it remains to be content with what has already been done in this area and what is still only planned to be done.

Alena Bodrienko.

Moskovskaya Pravda collage