Russia could accelerate its path to becoming one of the world’s biggest Bitcoin (BTC) and crypto miners – with reports that President Vladimir Putin has backed a measure that may see the industry legalized and brought under government regulation.
Bloomberg reported that the move could be “good news” for the crypto mining industry, and claimed that “three people familiar with the matter” who had asked “not to be identified because the information is not public” had confirmed Putin’s stance. They said the President had “backed” a “Russian government proposal to tax and regulate” mining, and had “rejected the Central Bank’s proposal to ban it completely.”
However, the plan proposes a number of limiting measures that the industry may not welcome: The sources stated that the plan would “restrict mining to regions with a surplus of electricity,” including Irkutsk, Krasnoyarsk, and Karelia. All three regions already have a large number of crypto miners, due to their favorably cold weather conditions and power surpluses.
The report noted that the Kremlin spokesman Dmitry Peskov had “declined to say what Putin’s stance was,” but added that the President had “ordered the government and Central Bank to work out their differences,” echoing Putin’s own sentiments from earlier this week.
Yesterday, Cryptonews.com reported that Putin had made note of Russia’s “certain competitive advantages” in crypto, “especially in the field of [crypto] mining.”
He specifically pointed out that the nation has an electricity surplus, as well as “well-trained personnel” versed in crypto.
Per University of Cambridge-compiled data, at the end of August last year, Russia was the world’s third-largest bitcoin (BTC) mining nation, behind only the USA and Kazakhstan.
However, that picture may well have already changed dramatically. Many of the miners fleeing China’s crypto crackdown last year are thought to have moved to Russia. And Kazakhstan has this winter effectively pulled the plug on many of its miners following an energy price crisis – meaning that Russia’s control over the global hashrate may well have climbed higher than August 2021’s 11.23%.
Meanwhile, pro-crypto forces in the government appear keen to press for “regulation, not bans” in response to the Central Bank’s calls last week for a shutdown of both crypto and mining.
Per RBC, the Ministry of Finance, which has – to some extent at least – previously championed the crypto industry against the vehemently anti-crypto Central Bank, has sent draft proposals to the government that, if accepted, would allow citizens to conduct crypto transactions via the conventional banking framework, providing personal data on crypto holders were made transparent.
A similar system – with anonymity removed from the equation – has already been implemented in South Korea, where all crypto-fiat trading must be made via exchanges that partner with domestic banks.
The Ministry reportedly claims that regulating crypto will be beneficial for the Russian state, and will help bolster tax revenue. The move, it claims, will help the police and other agencies uncover criminal behavior.
It also warned that a failure to regulate – or a blanket ban – would lead to a thriving black market for crypto, and that this would ultimately undermine the crypto sector in its bid for mainstream acceptance.
The move follows comments from a number of senior MPs, including committee chairs, who have hit out at the Central Bank’s repeated calls for a ban. Some went as far as claiming that the Central Bank’s position risked turning Russia into a “laughing stock” in the eyes of the international community.
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