Russia plans to recognize block reward miners officially in the not too distant future. According to the State Duma Committee on Financial Markets’ chairperson, Anatoly Aksakov, the State Duma is considering classifying mining as a type of entrepreneurship under local business laws.
The move to regulate digital currency is exceptionally good news for block reward miners. Many of them have found a mining haven in Russia, lured by remarkably inexpensive electricity rates and extremely low temperatures. The latter means they hardly need to spend much on cooling equipment, one of the largest expenses incurred in crypto mining.
The Changes Expected
The Russian government’s regulation of digital currency will set in motion a raft of changes such as:
- Introducing taxation
- The government will oversee digital currency operations
- Establishing a clear definition of digital currencies, given that these currencies behave more like speculative financial instruments
- Block reward mining to be recognized as an entrepreneurial activity and entered into the state register
- The implementation of more defining regulations to cover all the aspects of digital currencies, including payments – The bill on Digital Financial Assets passed in 2020 recognized digital currencies but prohibited their use for payment purposes.
Curiously, while digital currencies are legal in Russia, the ban on their use as a form of payment will remain in force. The Kremlin maintains that Russia is not about to declare digital currencies legal tender despite countries like El Salvador integrating digital currencies into their formal payment systems.
The government feels that granting digital currencies like Bitcoin such a status could endanger the financial system while providing minimal benefits.
Russia and the Future of Digital Currencies
The country’s digital currency space is still evolving. As mentioned, trading or possessing digital currencies is not illegal, but using them to make payments is. With digital currency payments outlawed, there’s a limit on how much you can do with your crypto.
There’s hope, though. Russia’s central bank supports the existence of a digital rouble. Elvira Nabiullina, the governor of the Bank of Russia, reported that a digital rouble could be the future for Russia’s financial system since it correlates with the development of a digital economy.
However, he acknowledged it was a challenging project, both legally and technologically, hence the need to take it a step at a time.
Making digital currencies legal tender might not be in the stars yet for Russia, but regulating the industry might be a step towards that eventuality.
