Evgeniy Grabchak, Russian Deputy Minister of Energy previously called for introduction of regional quotas of cryptocurrency mining farms instead of relating it at the federal level. Noteworthy, the Central Bank has been maintaining an anti-crypto stance and they have been requiring an outright ban of crypto.  However, the coming of the Western Sanctions is propelling Russia towards legalizing crypto.  The expectation is for this bill to provide for a new level of regulatory clarity.

Russian Deputy Minister of Energy has been looking to regularize cryptocurrency mining and felt that it should be looked at as a commercial activity. Thus, this will help bringing Bitcoin mining out of the gray area.  The regulation will focus on placing restrictions on electricity usage by individual miners.  Further, mining will be confined only to robust grids.  Grids in vulnerable areas will not be overwhelmed and burdened.

The ministry is also considering to lower tariffs for those cryptocurrency mining farms which will be set up in specific areas. However, when a specific limit of electricity consumption is reached, the energy prices will increase to compensate for it.  All of these rules are meant to ensure that providing electricity for mining does not affect the power supply required for domestic and other industrial requirements in the area.

Ukraine invasion and legalizing Bitcoin are in a way related.  The sanctions are probably accelerating the process.  What will happen if Russia legalizes crypto mining? If Russia Taxes it, this will also lead other countries follow suit. Will Bank of Russia accept the legalization process?

Kommersant, the local news outlet in Russia have to state that the Russian Ministry of Finance has completed a bill which addresses crypto payments in the country.  This bill will eventually provide clarity around “digital assets and digital mining.”

Russian entities will have to obtain permissions to trade cryptocurrencies and they will have to comply with rigorous identity checks.

The draft law states that, “The digital currency can be accepted as a means of payment, which need not be a monetary unit of Russian Federation.  The digital currency can also be an investment.  And, there must not be any obligated person in relation to it.”

Cryptocurrency platforms, if they have to provide their services in Russia, should comply with minimum capital requirements.  This minimum capital requirement is set at ”40,000” for exchange operators and “$100,000” for digital trading platforms.

Entities who are given permission to offer mining, exchange or platform services should stay compliant with Russian regulations.  This includes creating separate units, annual reports, internal control and audits, and complete registrations on specialized entities for Anti-Money Laundering (AML) and more.

In January, President Vladimir Putin required the government and the Central Bank to resolve their differences and highlighted Russia’s competitive advantage as a mining destination.