The Central Bank of Russia would agree to the legalization of cryptocurrency mining, provided the proceeds from the activity are converted to fiat outside of Russia. The regulator’s latest position on the matter comes after it softened its stance on the possible use of cryptocurrencies for payments, even if only internationally.
Central Bank of Russia to Accept Legalization of Cryptocurrency Mining
The monetary authority in Moscow is now ready to back the legalization of crypto mining under the condition that Russian miners are obliged to sell the coins they obtain in the process outside the country. That’s according to a recent statement by Kirill Pronin, head of Bank of Russia’s Financial Technologies Department.
The central bank has been the hardline voice in the ongoing discussions on the future of cryptocurrencies in Russia, proposing a blanket ban on most related activities earlier this year, including mining. However, facing opposition from other government institutions and having to deal with financial restrictions imposed over the war in Ukraine, its position has started to change.
Governor Elvira Nabiullina indicated last month that crypto payments can be permitted if they don’t “penetrate” the Russian financial system. At the same time, she insisted that digital currencies like bitcoin should not be traded on Russian platforms because these assets are too volatile and risky for potential investors.
Speaking during the St. Petersburg International Legal Forum this week, Pronin noted that while mining would not fall under the responsibility of the Central Bank of Russia (CBR), it is one of the ways to acquire cryptocurrency, in the form of fees for the validation of crypto transactions performed by miners. “The legalization of mining can be discussed, but a number of conditions, in our opinion, must be met in this regard,” he was quoted as saying by Interfax.
Ivan Chebeskov, director of the finance ministry’s Financial Policy Department, pointed out that some large crypto mining companies based in the Russian Federation have been also forced to deal with foreign restrictions when withdrawing funds. He suggested that Russia may have to create its own exchange infrastructure to provide liquidity to the industry.
Kirill Pronin reiterated, however, that according to the CBR, the cryptocurrency minted by the miners in Russia should be sold outside its borders and not allowed to accumulate within the country. The point is to avoid creating incentives for its subsequent use in domestic payments.
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.
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July 4, 2022
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