Russia’s new crypto law expands state control over digital assets

Russian government released a significant document detailing a new law signed by President Vladimir Putin. This legislation introduces sweeping changes to the regulation of digital currencies and, notably, cryptocurrency mining in Russia. The law, set to take effect on November 1, strengthens government control over mining activities and the infrastructure that supports them.

Overview of new legislation

The new law is part of Russia’s ongoing efforts to regulate digital currencies, increase oversight, and potentially leverage cryptocurrencies to mitigate the effects of international sanctions. By expanding the scope of oversight, Russia aims to reduce reliance on foreign currencies like the US dollar and ensure the security and transparency of digital transactions.

One of the most prominent aspects of this law is the government’s ability to impose restrictions on cryptocurrency mining activities based on regional requirements. The legislation allows the government to define specific circumstances under which mining operations can be prohibited. This gives the authorities greater flexibility in responding to local issues, such as energy shortages, environmental concerns, or even economic challenges.

In addition to targeting mining operations directly, the law also grants the Russian government the authority to regulate the infrastructure providers that support mining. This includes controlling companies that provide hardware, software, or energy to miners, thereby tightening the entire ecosystem of cryptocurrency production.

Impact on digital currency mining pools

The new law also addresses mining pools groups of miners who combine resources to increase efficiency. The legislation grants the government power to stop these mining pools from operating in specific regions. This control could help authorities manage and monitor mining activities more effectively, curbing illegal operations and ensuring compliance with national laws.

Under this legislation, multiple federal agencies, beyond Rosfinmonitoring (Federal Financial Monitoring Service), will gain access to digital currency identifiers. These identifiers are used to track digital transactions, which could be linked to illegal activities like money laundering or financing terrorism. This expansion will enhance Russia’s capacity to monitor and regulate crypto transactions comprehensively.

The responsibility for maintaining the national mining register has been shifted from the Ministry of Digital Development to the Federal Tax Service. This change signifies a more centralized and stringent approach to monitoring mining activities.

While individual miners can avoid registration if their electricity consumption remains within a defined limit, companies and individual entrepreneurs are now required to comply with new registration guidelines.

The gradual development of crypto regulations in Russia shows a dual approach: tightening control over mining and crypto infrastructure while simultaneously enabling the use of digital currencies to circumvent sanctions. This duality suggests a pragmatic strategy aimed at leveraging crypto’s potential while safeguarding national interests.

As Russia advances its crypto regulations, its stance may influence global cryptocurrency trends, especially in countries exploring the use of state-backed digital currencies.