Russian Legislators Pass Bill to Legalize Bitcoin Mining and Cross-Border Crypto Payments
Russia’s parliament has approved a bill to legalize Bitcoin mining and cryptocurrency payments for international trade. According to reports, the country’s Duma—the lower house of the Federal Assembly — has moved the bill through its first reading, pushing crypto acceptance closer to becoming law.
Russia hopes that legislative support for cryptocurrencies will positively affect the country’s economy and improve cross-border trade. With legal backing, corporate bodies that are usually reluctant to enter the sector may become willing to contribute.
Statutory support for crypto in many countries usually increases adoption across several sectors, especially in finance. However, adoption may also extend to industries like entertainment, supporting use cases such as cryptocurrency casinos that allow players to deposit, bet, and win at hundreds of exciting casino games by wagering digital assets like Bitcoin (BTC), Ether (ETH), and USDT. Unfortunately, Russia still does not allow local crypto payments for goods and services.
The bill was drafted by lawmakers led by Deputy Anatoly Aksakov, the Chairman of the State Duma Committee on Financial Market. First introduced last year, the bill awaits approval from the upper house before final assent from the Office of the President.
Among other specifications, the bill establishes rules for Bitcoin mining in Russia, hoping to tackle illegal crypto mining and related violations. According to Budget and Taxes Committee member Nikita Chaplin, Russians mined 54,000 BTC in 2023, worth more than $3.5 billion.
The requirements in the draft law cover all entities, individual or corporate, involved in crypto mining. The government and the Bank of Russia will jointly form the standards, requiring the Ministry of Digital Development to ensure compliance. According to the bill, mining is permissible only by registered individual entrepreneurs and legal entities. Although citizens can freely mine crypto without registration, their energy consumption must remain within limits provided by the Cabinet of Ministers. Also, to ensure all participants play fairly in the energy market and do not operate within areas where interests conflict, registered miners must separate mining activity from other electricity-related endeavors.
In addition to electricity consumption requirements, miners must report all crypto obtained from mining activities. After reporting, miners can sell mined crypto freely. However, they can only distribute digital assets within the country for mining-related purposes, such as mining pools. The bill also forbids any crypto-related promotion, advertisements, or public offerings.
A recent Reuters report revealed that Russia was contemplating pro-crypto legislation because it has suffered trade delays on international transactions due to pressure from Western stakeholders. The country’s head of the Federal Financial Monitoring Service, Yuri Chekhanchin, warned parliament to rightfully consider the advantages of crypto to maintain international trade but also analyze all associated risks.
Russia is following in the footsteps of nations like Venezuela, who have also used digital assets to circumvent sanctions from Western authorities. Nonetheless, Chekhanchin wants his agency to have the authority to block transactions that violate financial regulations. If the president greenlights the bill, the law will take effect from September 1, 2024.
In addition to supporting crypto mining, Russia is also considering legalizing stablecoins for international transactions. Across many crypto-friendly sectors, such as crypto gambling, payments are sometimes denominated in stablecoins to simplify transactions and remove the need for conversions. Since stablecoins are less volatile, the Russian central bank is considering their permanent use for cross-border transactions, especially with BRICS countries — Brazil, Russia, India, China, South Africa, Iran, Ethiopia, Egypt, and the United Arab Emirates.