Russian government wants to legalize Bitcoin mining in specific areas

Written by Ayomide Abimbola

February 15, 2022

In the process of the Russian government striving hard to come up with cryptocurrency regulations, a federal ministry has made another proposal regarding the crypto mining industry.

Russia’s Ministry of Economic Development has allowed the concept of crypto mining regulation in the country, proposing to allow mining operations in areas with “sustainable surplus in electricity generation,” local news agency Izvestia reported Tuesday.

As part of the proposal, the ministry suggested the introduction of lower fees for setting up mining farms and data centers in specific Russia’s areas also offering reduced energy rates for such facilities.

The ministry also considers the establishment of a power use limit for mining by individuals, reportedly proposing to introduce higher energy rates for increased energy spending. The authority is yet to determine a threshold amount for this, the report notes

According to the ministry, the newly proposed rules would eradicate the risks of insufficient power supply for housing, social facilities and infrastructure in other regions of the country.

In addition to this, the ministry reportedly proposed recognizing crypto mining as a commercial activity and introducing taxes on realized profits from cryptocurrency mining.

The latest proposal comes from the ongoing uncertainty over crypto regulation in Russia, with different parts of the government still comtemplating  on how to regulate Bitcoin (BTC).

As previously reported, Russia’s finance ministry has been advocating for regulating the crypto industry, while the Russian central bank has been aggressively insisting to ban crypto transactions, citing investor protection risks. As the government formally approved the concept of crypto regulation on Feb. 8, Bank of Russia’s governor Elvira Nabiullina subsequently declared that the bank did not support the state’s decision and will continue to oppose crypto adoption in Russia.

The government and the central bank reportedly expected to introduce a joint crypto regulation bill by this Friday (18th Feb 2022).

Some major state-backed financial institutions in Russia have also supported the idea of regulating crypto in the country recently. Anatoly Popov, deputy chairman of the executive board at Russia’s banking giant Sber, reportedly voiced the company’s support of regulating the industry rather than banning it.

“Our position coincides with the position of the government that cryptocurrencies should be regulated, not banned. Effective regulation is needed that will allow citizens and organizations to legally acquire cryptocurrency, take it into account AML mechanisms and taxation,” he said.

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