Russia has taken significant steps to integrate cryptocurrency into its financial system with two newly passed laws. The first law fully legalizes cryptocurrency mining beginning from November 1, 2024. Registered legal entities and individual entrepreneurs can engage in mining, while unregistered entities are limited by energy consumption thresholds.
Multiple institutions will oversee the mining activities, with the Bank of Russia having predominant authority. The government, in collaboration with the central bank, will set requirements for mining infrastructure operators and participants. Miners must report the digital currency obtained from their operations to a government-authorized body, which, along with the central bank, can restrict transactions to maintain monetary stability. The law notably also bans the advertising of cryptocurrencies to the general public.
The second law, effective September 1, 2024, introduces an experimental regime allowing the Bank of Russia to authorize selected companies to conduct cross-border settlements and exchange trading in digital currency. This initiative will enable companies, exchanges, and crypto entities to apply for participation in this regime. The Bank of Russia will oversee experiments on using cryptocurrency for foreign trade settlements, exchange trading, and creating an electronic platform for cryptocurrency operations.
These legislative moves are part of Russia's strategy to counteract the severe international sanctions imposed due to its ongoing conflict with Ukraine. According to Anatoly Aksakov, head of the Duma's lower house, this represents a historic decision in the financial sector.
The new measures will regulate the extensive crypto-mining activity already occurring in Russia, one of the world's leading crypto-mining nations. Despite previous concerns about the energy demands of crypto-mining, the country's cool climate and low electricity costs make it an attractive location for miners.
However, the legislation restricts large-scale mining to government-approved companies that must provide transaction data. Furthermore, the Russian Central Bank plans to introduce a government-backed "digital ruble" to enhance economic infrastructure.
Lastly, cryptocurrency will remain invalid for domestic payments in Russia but will facilitate expedited transactions with key trading partners, including China, India, and the UAE. The first official crypto transactions are expected before the end of the year, according to the Governor of the Russian Central Bank, Elvira Nabiullina. She noted that payment delays, exacerbated by secondary sanctions, have led to an 8% decrease in Russian imports this year.