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Russian Ministry proposes  to legalize and tax Bitcoin mining

Legal

www.fxstreet.com 15 February 2022 23:58, UTC
  
Reading time: ~2 m

  • The Ministry of Economic Development in Russia has given the greenlight for crypto mining regulations in the country.
  • Cryptocurrency mining operations will be allowed in areas in Russia with an electricity surplus.
  • The ministry proposed recognizing cryptocurrency mining as a commercial activity and coins converted into rubles are expected to be taxed.

Russia’s Ministry of Economic Development has put forward a proposal to allow cryptocurrency mining operations in the country in areas with “sustainable surplus in electricity generation.” The proposal suggests introducing lower fees for setting up mining farms in specific regions in Russia.

Russian ministry to incentivize crypto industry growth

The Ministry of Economic Development in Russia is suggesting to legalize and tax Bitcoin mining in areas with a surplus in electricity. 

Currently, Bitcoin mining is considered to be in a legal gray area but the new proposal says crypto mining should be recognized as a form of “commercial activity.” The proposal states that once coins are converted into rubles, they will need to be taxed.

The new proposal enables Russia to benefit from mining while at the same time not overwhelming its electrical grid in vulnerable areas. Bitcoin mining will be confined to reliable grids and electricity-use limits on individual miners will be set, according to the ministry. 

The proposal will incentivize industry growth, while the ministry will explore introducing lower electricity rates and tariffs for setting up cryptocurrency mining farms in specific areas. If a certain energy threshold is passed, energy prices will be raised.

The newly proposed rules will minimize the risks of insufficient power supply for housing social facilities and infrastructure in other regions of the country. The proposal will avoid crypto mining-related issues with electricity faced in Iran and Kazakhstan, where Bitcoin mining has overwhelmed electrical grids in vulnerable areas. 

The Russian government is working on a regulatory framework for cryptocurrencies while uncertainty over Bitcoin regulation continues. The country’s finance ministry has been seeking to regulate the crypto industry, while the Bank of Russia has insisted on banning the new asset class, citing investor risks.

The country’s government and central bank are expected to put forward a joint cryptocurrency regulation bill later this week.


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