The legalization of cryptocurrency mining would be supported by the Central Bank of Russia, provided that the earnings from the activity are converted to fiat currency outside of Russia. The regulator’s most recent stance on the subject follows a softening of its position on the potential use of cryptocurrencies for payments, even if only globally.
Moscow’s central bank is now prepared to support the legalization of cryptocurrency mining, provided that Russian miners are required to sell the coins they earn abroad. Kirill Pronin, the director of the Bank of Russia’s Financial Technologies Department, recently made a statement to that effect.
The central bank, which earlier this year proposed a blanket ban on the majority of related activities, including mining, has been the most outspoken opponent of cryptocurrencies in Russia’s ongoing policy debates. The government’s position has begun to shift, though, as a result of opposition from other institutions and financial constraints brought on by the conflict in Ukraine.
Last month, Governor Elvira Nabiullina said that cryptocurrency payments could be accepted as long as they didn’t “penetrate” the Russian financial system. She also argued that because virtual currencies like bitcoin are so unstable and risky for potential investors, they shouldn’t be traded on Russian platforms.
This week, Pronin noted that mining is one of the ways to obtain cryptocurrency in the form of fees for the validation of crypto transactions carried out by miners, even though it would not be under the supervision of the Central Bank of Russia (CBR). He was quoted as saying, “The legalization of mining can be discussed, but in this regard, we believe a number of conditions must be met.”
Ivan Chebeskov, the director of the Financial Policy Department of the ministry of finance, emphasized that some significant crypto mining businesses with headquarters in the Russian Federation have also been compelled to deal with foreign restrictions when withdrawing funds. He proposed that in order to provide liquidity to the sector, Russia might need to build its own exchange infrastructure.
However, Kirill Pronin reaffirmed that, in accordance with the CBR, the cryptocurrency created by Russian miners should be sold outside of Russia and not be permitted to amass there. Avoiding providing incentives for its subsequent use in domestic payments is the key.
Besides the new bill “On Digital Currency,” expected to comprehensively regulate Russia’s crypto space, a dedicated draft law “On Mining in the Russian Federation” was submitted to the State Duma in April. Members of the lower house of Russian parliament propose to recognize crypto mining as a business activity using Russian information infrastructure and equipment located in the country.