Russian Ministry’s Crypto Mining Plans ‘a Cause for Concern’

Bitcoin Cryptocurrency Mining Regulation Russia

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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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June 26, 2023

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The Russian Ministry of Finance wants to ban crypto miners from receiving token rewards leading to what newspaper Izvestia has called “a de facto ban on the circulation of cryptoassets in Russia.”

The newspaper said it has seen Ministry of Finance-drafted legislation proposals pertaining to a forthcoming crypto law that politicians claim may be ready for parliamentary debate as early as this month.

However, it may still be too early to ring the alarm bells, however, as the document appears to be a consultation paper that is awaiting legal review.

In either case, the measures have already been met with resistance from the industry. Moscow resident and crypto investment advisor Dmitriy Zaikov spoke to Cryptonews.com, stating,

“I find it hard to believe this is a serious proposition, but if it is, it’s a cause for concern. The Ministry of Finance has generally been pretty reasonable on crypto matters. I’m not sure how effectively banning crypto mining will benefit this country financially.”

Crypto mining has boomed in Russia, where energy prices are often low and cooling costs often minimal.

But it appears the ministry may be ready to move closer to the crypto-skeptic Central Bank’s position on crypto-related matters.

The ministry is allegedly content to allow individuals to mine coins, but not reap the rewards – and would seek to introduce criminal liability for mining-related offenses.

Offenders could be reportedly hit with fines of up to USD 1,330 and prison sentences of up to seven years.

The Izvestia report authors noted,

“The wording of the document does not bode well for miners, since it is not clear how they would receive remuneration [under the proposals].”

Monthly share of total Bitcoin hasrate in April

In fact, the proposals appear to go a step further than simply limiting crypto mining – and would seek to prohibit companies and individuals from “performing any transactions with cryptoassets,” per the Izvestia journalists, with the exception of three instances.

The ministry appears to be content to allow crypto inheritances, and will also allow creditors to obtain assets in bankruptcy proceedings. Courts and law enforcement agencies would also be allowed to confiscate crypto funds as part of legal proceedings.

Readers might also recall that another strong-worded crypto crackdown-advocating proposal was shot down in May this year following industry and government pushback, while a local industry insider has previously told Cryptonews.com that a definitive crypto law for Russia may take a year or more to materialize.