Russia Crypto Mining Legalization ‘Will Boost State Coffers by $570M’

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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July 24, 2024

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Russia’s crypto mining legalization could provide the Treasury with a $570 million boost, lawmakers estimate.

After years of going back and forth on the matter of crypto mining regulation, parliamentarians say they are finally ready to vote on legalizing industrial mining.

The newspaper Izvestia reported that the bill will be set before the State Duma this week.

Top politicians claim it could be adopted “in full” before the end of the current session on August 5.

Russia Crypto Mining Legalization: New Regulator to Police Sector

“Market players” told Izvestia that bringing the industry “out of the shadows” will also help its development and provide Russia with new cross-border settlement options.

The report claimed that industrial miners “can bring” the nation “about $2.8 billion of net liquidity” in crypto.

The vast majority of Russian crypto miners focus their efforts on Bitcoin (BTC), although smaller numbers instead choose to mine tokens like Litecoin (LTC).

The $570 million boost, however, will mainly come in the form of tax revenue. At present, mining has no legal status, so industrial players do not pay taxes on their profits.

Miners are keen to change this, apparently confident that the value of future investments will outweigh any future tax bills.

Bill ‘Has Gone Back and Forth for Years’

Izvestia says the bill “was prepared a year and a half ago, then revised several times.” But its latest iteration only made it to the State Duma “following President Vladimir Putin’s instructions last week.”

The media outlet noted that the bill’s first reading is likely to pass without event. However, politicians are likely to make amendments ahead of the bill’s second and third readings.

Valery Seleznev, the first deputy chairman of the head of the State Duma Committee on Energy, told the newspaper that he expects the Russian lower house to pass the bill “during the remaining week and a half of the spring session.”

Key issues mentioned in the bill in its current form include the following:

• Crypto miners will be forced to declare their income
• Regulators will create a national registry of approved crypto miners
• The government will create a set of rules for crypto miners in conjunction with the Central Bank
• Moscow will create a “federal executive body” that will “monitor compliance with these rules”

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Lobbying and Presidential Pressure Speeding Bill’s Progress

The bill was essentially resurrected in April this year, following intensive lobbying from crypto mining industry bodies.

Miners have also told the Russian government that they will allow Moscow to access many of their new state-of-the-art data centers for state-run IT projects.

However, several issues remain to be settled as the bill makes its way to the State Duma.

The Central Bank previously said it wanted industrial miners to sell all their coins on overseas crypto exchanges.

The bank does not want crypto to “enter the Russian economy” and thinks that overseas platforms will help convert these coins to cash.

However, the bank’s suggestion has found a shortage of supporters. The anti-money laundering agency and law enforcement bodies have pointed out that such a move would open the door to money laundering schemes.

Izvestia reported that the Russian Cabinet also disapproves. Ministers reportedly “want to allow the use of Russian infrastructure” – i.e. Russian crypto exchanges – for the “sale of such assets.”

Seleznev said he supported this suggestion, claiming that this would allow the new system “to function” properly.

The MP added that the law would thus not “interfere with” companies trying to process “international settlements with digital assets.”

Crypto Mining Tax Proposals ‘Still in Development’

In order to speed the bill through the State Duma, lawmakers say the bill will not contain any tax-related clauses.

This, they say, will be the subject of a separate bill that will make the necessary changes to the Russian tax code.

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— Bloomberg Markets (@markets) July 24, 2024

MPs claim that miners may have to pay “income tax” on their earnings. However, “alternatives” to this proposal have also been floated.

The newspaper reported that some Ministry of Finance officials have also suggested launching an “excise tax” on the electricity used for mining.

The bill will also likely contain clauses allowing Russian regions to limit or ban crypto mining operations if they believe their grids are under pressure.