One law allows for mining operations and the other is an experimental regime for cross-border payments with crypto.
Russia’s State Duma, the lower chamber of the country’s parliament, approved two cryptocurrency-related laws today, one that legalizes mining, and an experimental regime that confers power to the Russian central bank to authorize companies for cross-border payments with crypto.
Crypto mining can start Nov. 1, but only for national companies and individual entrepreneurs registered with the Ministry of Digital Development.
If an entity is not registered, they can operate mining rigs as long as they do not exceed energy consumption limits. Limits are region-specific, and are subject to the size of the operations.
Days after Putin invaded the neighboring Ukraine, the nation was unilaterally banned from a number of online services, including most financial rails. Additionally, Russia is known for its draconian government which allows for little-to-no-dissent from opposers to Putin’s regime. As such, cryptocurrencies in theory represent an attractive alternative – as long as Putin’s authoritative government allows their use.
State authorities will also retain the power to ban or restrict transactions with cryptocurrencies, along with a prohibition to advertise digital currencies in the country.
Even if crypto can operate within boundaries set by the Russian government, the move may prompt other jurisdictions to also provide a regulatory framework for the industry.
According to a translation of Ria Novosti, a Russia state-owned news agency, supervision over mining activities will fall on the Bank of Russia, although the cabinet of ministers will set requirements for mining companies. Participants in mining pool operations will be vetted by the Russian central government in conjunction with the Bank of Russia.
An Experimental Regime
The State Duma also approved an experimental regime which offers the Bank of Russia authority over which companies it allows to conduct cross-border payments and exchange trading with cryptocurrencies.
The Bank of Russia will be able to conduct three experiments from Sept. 1: On the use of cryptocurrency for settlements in foreign trade, on exchange trading in cryptocurrency and on the creation of an electronic platform for operations with cryptocurrency on the basis of the National Payment System (NPS).
Ria Novosti reported that the Bank of Russia will monitor the activities of digital asset payment providers to “identify risks to the defense and security of the risks,” along with assessing potential money laundering and terrorist financing.