On October 25, 2024, Russian President Vladimir Putin signed two key laws designed to provide a regulatory framework for cryptocurrency mining in the country. The new measures, which come into effect on November 1, 2024, and March 2025, aim to fill the legal vacuum surrounding the mining sector, but industry experts warn that these laws do not fully legalize cryptocurrency mining in Russia.
Overview of the Laws
The first law, signed in August 2024, introduces a definition for key terms such as mining and mining pools, and establishes registration and reporting requirements for businesses engaged in mining activities. It also prohibits foreign entities from engaging in mining operations within Russia and grants the government the ability to restrict mining in certain regions based on factors like energy consumption or environmental concerns.
The second law, signed on October 25, outlines the rules governing mining activity, as well as regulations for the circulation of digital currencies in Russia. While this law also comes into effect on November 1, its core provisions related to the regulation of mining will come into force in March 2025.
Industry Experts’ Perspective: Not Full Legalization
Despite the new laws providing a regulatory framework for the industry, experts argue that Russia has not fully legalized cryptocurrency mining. Rather than outright legalization, the laws establish a set of controls and restrictions aimed at increasing oversight and ensuring that the sector operates within specific parameters.
Nikita Zuborev, chief analyst at the local exchange directory BestChange, explained in an interview that the new legislation does not represent full legalization, but rather sets up the framework for greater regulatory control over industrial mining operations. Zuborev pointed out that the laws define key terms and establish taxation norms and electricity consumption standards, but they do not introduce clear regulations on many aspects of the industry. Specifically, tax figures and energy restrictions will be set by responsible government ministries at a later stage.
“There is no clear legalization, it only paves the ground for more precise taxation,” Zuborev said. Prior to the new laws, miners paid hosting provider rates, but now payments will be linked to the amount of cryptocurrency mined.
A Step Toward Clarity, But Not Full Legalization
Maria Agranovskaya, a fintech and international law expert, echoed Zuborev’s views, explaining that although the new laws bring more clarity to the legal terminology surrounding mining, they do not necessarily legalize the practice. Agranovskaya noted that Russia’s largest mining companies were already operating in the country in compliance with the law prior to the passage of this legislation, indicating that the laws mainly serve to provide a more structured and transparent framework for mining activities.
“I can’t say that the act [law] legalized mining,” she said. “But, of course, more clarity with legal terms was very useful.”
Key Takeaways
- Crypto mining in Russia is not fully legalized, but new laws provide a clearer framework for regulation.
- The laws introduce key definitions for mining, registration requirements for businesses, and allow for regional restrictions.
- Foreign entities are banned from mining in Russia, and specific tax rates and electricity consumption norms will be set by government ministries.
- Experts view the laws as a way to simplify control over industrial mining, but they do not introduce comprehensive regulations or significant legal clarity.
In conclusion, while Russia’s crypto mining laws establish a framework for industry oversight, they do not represent a complete legalization of the sector. Instead, they offer a more structured environment for mining businesses, providing regulatory clarity and preparing the ground for more specific controls over taxation and energy consumption. However, much remains to be defined, and the implementation of these laws over the next few years will likely continue to evolve.
