Russia’s Ministry of Finance is said to have finalized its cryptocurrency regulation bill, and will be applying it soon. Experts believe that the legislation will open up new opportunities for digital asset mining. It could also drive investors to the “black market.”
It’s high time for clarity
Russian authorities are indecisive about how to regulate local cryptocurrency. The nation’s central bank, known for its anti-crypto views, proposed that all digital assets be banned from Russia at the start of 2022.
The idea was rejected by the Ministry of Finance as well as President Vladimir Putin. While the former suggested that an industry regulatory framework would be a better approach, Russia’s leader claimed that crypto (especially mining), could bring certain benefits to Russia.
Months passed and institutions failed to come to a common agreement. It is safe to assume that the government has shifted its focus to the ongoing military conflict, leaving unresolved the issue of crypto regulation.
Recent coverage has shown that the final outlook of legislation was formulated by Russia’s Ministry of Finance. It establishes a variety of requirements for identification and accounting that crypto investors must complete.
According to the draft law, digital currencies can be accepted as a payment method that is not the Russian Federation’s monetary unit, as well as as an investment. However, there must be no person obligated to use it.
Crypto exchanges that operate within the bill’s scope can have a capital of 30 million rubles ($366,000), and crypto auctions can have holdings not less than $1.2million. Each entity will be required to submit annual reports detailing their activities, meet audit and internal control requirements, and create an independent structural unit.
Only Russian-based companies can apply to the position of digital asset operator. To operate in Russia, foreign organizations must obtain a license and create a subsidiary.
Chen Limin, ICB Fund’s CFO, believes Binance, the largest digital asset trading platform in the world, could be granted permission to settle in Russia. CZ’s company has shown its intention to expand into the country, which is quite interesting.
What about Crypto Mining?
Since Putin finds this niche valuable, it is not surprising that legislation was primarily focused on the application of regulations to the digital asset mining sector. Russia ranks third in global cryptocurrency mining hash rates, behind only the US and Kazakhstan.
According to the Finance Ministry’s most recent bill, miners will need to apply in a register. The government will provide the data centers necessary for this. The taxation system will be separate:
“Finally, the draft law examines in detail, for the first-time, the mining process legal entities and entrepreneurs will be allowed to perform after being added in the relevant register.”
Mikhail Uspensky, a blockchain lawyer, believes that these steps will “somehow bring this under control” to eliminate crypto mining from the grey market.
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