Russian crypto industry chiefs have teamed up with business leaders to create a draft bill that could legalize the nation’s booming mining sector.
According to ComNews, Alexander Brazhnikov, the Executive Director of the Russian Association of Cryptocurrency and Blockchain (RACIB), spoke about the bill at a crypto-related event on March 22.
Russian Crypto Industry: Time to Legalize Mining
Brazhnikov said he expected 2024 to “bring many changes for the industry. He explained:
“I have spoken with regulators. They said that we should not wait for their proposals on the formation of a bill on mining in Russia. Instead, they suggested proposing ideas ourselves.”
Brazhnikov said that RACIB had done just that. He said the industry body had “sent letters” to ministries proposing “developing the crypto-economy and crypto mining in Russia.”
The industry chief said the body had sent draft regulation proposals to the Ministry of Energy and the Ministry of Economic Development.
And Brazhnikov added that he would also send the draft bill to Rosfinmonitoring, the nation’s anti-money laundering agency.
The RACIB chief said the Ministry of Finance would also be invited to “consider” the proposals.
Industry leaders will be hopeful of a breakthrough after years of fruitless discussions and pleading with Moscow to legalize their business operations.
However, they will be hopeful this latest bid could succeed where others have failed. The RACIB bill has already won the support of State Duma lawmakers Anton Tkachev, Vladimir Plyakin, Grigory Shilkin, and Sardana Avksentyeva.
The bill claims that, per “expert estimates,” Russian citizens “have opened more than 12 million cryptocurrency wallets” as the nation becomes increasingly crypto-keen.
Russians Turn to Crypto?
RACIB says Russians are currently holding a combined total of $108 billion worth of coins in crypto wallets.
It explained that the nation “is among the world’s leaders in terms of mining capacity.”
By contrast, the bill’s authors noted, “all transactions” with crypto are “carried out in a ‘gray’ (unregulated) zone.”
This means that people who want to conduct legitimate business operations with crypto risk criminal prosecution.
Miners have already tried – and failed – to win Moscow over to their cause. A bill reached the floor of the Duma in 2022. However, this bill was abandoned after its first reading.
Undeterred, RACIB has resolved to try again. On November 20, 2023, the body created a working group to work on crypto mining policy.
The group’s members included representatives from government agencies, as well as energy industry insiders.
Senior members of the Russian mining community also joined the working group.
The same group drafted a bill that first materialized on March 4, 2024. The body first sent this to the Minister of Economic Development of the Russian Federation, Maxim Reshetnikov.
As previously reported, miners appear keen to sweeten the deal with Moscow by promising ministers access to their new data centers.
These centers, miners say, could help ministers save $32.4 million on new tech development plans.
Industry chiefs have also claimed they are prepared to invest $4 billion in new multi-purpose data centers.
About 6,000 older Bitcoin mining machines in the US will soon be idled and sent to a warehouse in Colorado Springs where they’ll be refreshed and resold to buyers overseas looking to profit from mining in lower-cost environs
— Bloomberg Crypto (@crypto) March 23, 2024
Companies Ready to Invest?
Mining firms like BitRiver are already building expensive new facilities in the Russian South.
The miners’ primary goal is securing an official classification for mining as a “form of economic activity.”
This would mean that the Russian state could begin taxing crypto miners. But it would also ensure a safe future for companies who are trying to expand their operations in the country.
The Russian crypto industry also wants Moscow to “create an experimental legal sandbox” for the “centralized conversion of digital assets obtained as a result of mining.”
Russia holds a day of mourning following a terrorist attack that killed at least 137 in Moscow
— Bloomberg (@business) March 25, 2024
This would suggest that some lawmakers are still keen on creating a “state-run” crypto exchange for miners.
Some want the exchange to serve Russian firms that use crypto as a payment tool in cross-border trade.
CBDC a Stumbling Block?
The media outlet quoted the independent financial advisor Elena Savina as stating that there was still a chance the bill could fall on deaf ears.
Moscow, Savina said, is currently fast-tracking its CBDC project, and could frown on efforts to legitimize the crypto sector. She explained:
“It is necessary to take into account that the state is currently focusing much of its efforts on the development of operations with the digital ruble.”
