Russia must hurry to legalize crypto mining
A Russian lawmaker has called for the legalization of cryptomining and has argued that bringing mining out of a “gray” legal sphere as soon as possible will benefit both miners and the government.
The comments came from MP Sergei Malikov, a member of the Moscow Regional Duma, where he represents the ruling United Russia party.
Per an article posted on his own website and a report by RIAMO, Malikov stated that Russian miners were currently “in a precarious position.”
“Companies that want to work within the law and declare their mining revenue should have the option to do so.”
Malikov said miners were “ready to comply with the law.” and that collecting tax revenue from miners would “allow beneficial cooperation with the state” in the crypto sector.
And MP claimed the mining industry had taken a hit in recent months, with crypto prices still well below 2021 highs.
The MP said he believed the picture will change for Russian miners after the market “returns to normal”.
“Mining on most blockchain networks is not profitable enough, so there are not so many active crypto mining farms in Russia at the moment. It should be taken into account when [MPs] drafts the law.”
Why are Russian MPs so interested in legalizing crypto mining?
Crypto mining has become a political hot potato in recent years, with many oil and gas companies hoping to start mining. However, since cryptomining has no legal status in Russia, companies cannot officially engage in it. Industrial miners want Moscow to recognize mining as an “entrepreneurial activity”.
Doing so will allow companies to start full-fledged businesses dedicated to crypto mining. The nation’s energy, industry, trade and finance ministries also want to legalize mining – and hope that will allow them to tax miners on their earnings.
But the central bank has thrown up an obstacle in this regard. It prefers to ban crypto trading and will only give its consent to the legalization of mining if it can ensure that all mined tokens are sold and “do not enter the Russian economy”.
The bank wants miners to sell their coins for fiat on international trading platforms. But law enforcement agencies seem to resent the idea — fearing it could open the door to money laundering.
The most likely outcome seems to be a compromise. Earlier this week, several Russian media reported that a new draft mining law would include “severe penalties” for miners who fail to report their activities to regulators. These penalties reportedly include prison terms.
The bill should also include clauses banning unregistered crypto trading platforms.
This bill is a revised version of a draft law that first appeared in January. Miners have been calling on Moscow to legalize and tax the industry since 2021.