The legalization of cryptocurrency mining in Russia could replenish the treasury by $570 million, legislators have calculated.
After years of debate over the regulation of crypto mining, parliamentarians say they are finally ready to vote on legalizing industrial mining.
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The bill will be submitted to the State Duma this week.
Senior politicians say the bill could be passed “in full” before the end of the current session on August 5.
Legalization of crypto mining in Russia: a new regulator in the police sector
“Market participants” told Izvestia that bringing the industry “out of the shadows” will also help its development and provide Russia with new opportunities for cross-border payments.
The report claims that industrial miners “could bring” the country “about $2.8 billion in net liquidity” in cryptocurrency.
The vast majority of Russian crypto miners focus on mining Bitcoin (BTC), although some prefer to mine tokens such as Litecoin (LTC).
Legalized mining is expected to generate approximately $570 million in tax revenue. Currently, mining does not have legal status, so industrial players do not pay taxes on their profits.
Miners are seeking to change this, believing that the benefits of future investments will outweigh any future tax liability.
The bill “was prepared a year and a half ago and has been revised several times.” However, its latest version was submitted to the State Duma only “in accordance with the instructions of President Vladimir Putin last week.”
The media noted that the first reading of the bill will most likely take place without significant events. However, politicians are likely to introduce amendments before the second and third readings.
Valery Seleznev, first deputy chairman of the State Duma Energy Committee, told the newspaper that he expects the lower house to pass the bill “during the remaining week and a half of the spring session.”
Key points of the bill include:
- Crypto miners will be required to declare their income.
- Regulators will create a national registry of approved crypto miners.
- The government, together with the Central Bank, will develop a set of rules for cryptocurrency miners.
- A “federal executive body” will be created in Moscow, which will monitor compliance with these rules.
Lobbying and presidential pressure accelerate bill progress
The bill was revised in April this year after intense lobbying from members of the crypto mining industry.
The miners also told the Russian government that they are ready to provide Moscow with access to their latest data centers for government IT projects.
However, as the bill advances to the State Duma, unresolved issues remain.
The central bank has previously said it wants industrial miners to sell all their coins on overseas crypto exchanges.
The bank does not want cryptocurrency to “enter the Russian economy” and believes that foreign platforms will help convert these coins into cash.
However, this proposal met resistance. The anti-money laundering agency and law enforcement agencies have indicated that such a move could facilitate money laundering schemes.
Izvestia reported that the Russian cabinet of ministers also does not support this idea. Ministers “want to allow the use of Russian infrastructure,” that is, Russian cryptocurrency exchanges, for “the sale of such assets.”
Valery Seleznev supports this proposal, arguing that this will allow the new system to “function” properly.
The deputy added that in this way the law will not “interfere” with companies trying to carry out “international settlements using digital assets.”
Crypto Mining Tax Proposals ‘Still in Development’
To speed up the bill's consideration in the State Duma, lawmakers say it will not contain tax-related provisions.
They explained that taxation would be the subject of a separate bill that would make the necessary changes to the Russian tax code.
MPs suggest that miners may have to pay income tax on their income. However, alternative options are also being considered.
The newspaper reported that some Treasury Department officials have proposed introducing an excise tax on electricity used for mining.
The bill would likely include provisions allowing Russian regions to restrict or ban crypto mining operations if they believe their energy networks are under undue pressure.
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