Mining Law

10.06.2023, 17:04
The bill on mining cryptocurrencies in Russia can give an impetus to the development of the market or finally bury it
Mining Law

After a bill on mining digital assets in Russia was submitted to the State Duma, it caused a mixed reaction in the market. On the one hand, mining is being brought into the legal legal field, but on the other, it states that advertising of digital assets will be completely prohibited.

The deputies' comments did not make it clear. For example, Anatoly Aksakov noted that the bill provides for a complete ban on the circulation of cryptocurrencies. And Deputy Anton Gorelkin, in the Telegram channel, presented an alternative interpretation of the document. In his opinion, there is no talk of a total ban on cryptocurrencies in the Russian Federation.

The market will develop after the adoption of the bill on mining cryptocurrencies

It is worth noting that the bill contains the phrase "prohibition of offering digital currency for the purposes of organizing circulation." In this formulation, the position of the Central Bank with its policy of banning cryptocurrencies in the country is visible. However, the bill does not introduce new prohibitions. They already are. It is enough to recall the recommendations of the Central Bank and its recognition that all transactions with digital currencies are a sign indicating the laundering of proceeds from crime or the financing of terrorism.

There are no additional restrictions in the new bill. Therefore, miners can continue to work by selling cryptocurrencies on foreign platforms. As for the ban on advertising cryptocurrencies, there is nothing in it yet to indicate responsibility for it.

Most likely, market participants will look for new opportunities for advertising, and they are unlikely to be brought to administrative responsibility. The main advantage of the bill is that it finally removes mining in the country from the "gray zone".

Do not expect any special changes in the market after the adoption of the bill on mining cryptocurrencies in Russia

If the bill is adopted in its current form, we should not expect serious changes in the market. The bill does not apply to foreign crypto exchanges, which are used by almost all market participants.

At the same time, it will not allow the domestic cryptocurrency infrastructure to develop properly. The ban on advertising cryptocurrencies will not be a serious obstacle for large players, and small companies have not been engaged in it anyway, since they are suffering losses due to the fall in the price of Bitcoin.

Statements that the turnover of cryptocurrencies on the territory of the country will be prohibited may indicate that it will be impossible to use the Russian information structure. That is, it is possible to launch a node or make an exchange of cryptocurrencies only with the use of foreign infrastructure. And there are such opportunities, and such actions are not prohibited. It can be assumed that the Russian Federation is following the regulatory scenario that is applied in Iran.

The bill will completely bury the crypto industry in Russia

The bill proposes to prohibit advertising cryptocurrencies, all goods and services that are associated with the organization of the issuance and circulation of digital assets. Such changes will have a serious impact on the activities of exchange offices and even developers involved in creating software for digital assets. All public statements about the experience of working with digital assets and the publication of offers to buy or sell cryptocurrencies will be banned.

Users will have to negotiate directly on prohibited transactions and services using messengers. This will throw the Russian Federation away from innovations that are being implemented in other countries. In fact, the bill leaves no chance for the development of the cryptocurrency industry in the country.

It is worth noting that the outflow of specialists related to the industry has increased recently. The authorities do nothing but try to impose strict restrictions, prohibitions, and measures of responsibility. The Russian cryptocurrency industry is already lagging behind other countries.

In the best case, the Russian Federation will become a resource country for the extraction of digital assets, and all innovations will be developed in other states. If the bill is adopted in its current version, the gap between the foreign market and the domestic industry will be extremely large. How it can be overcome with such legislation is unknown.

So what will happen to the cryptocurrency mining market and the industry in general in the Russian Federation? We'll find out next year!

Author: Vadim Gruzdev, Analyst at Freedman Club Crypto News

Read on the topic: Jeffrey Sprecher: "Cryptocurrencies should be regulated as securities"