It appears that the Russian government has decided to go all-in where cryptocurrencies are concerned. Not long after the country announced that all cryptocurrencies, such as bitcoin, would have the same status as fiat currencies, Russia now also wants to legalize crypto mining. The Ministry of Economic Development has proposed that all crypto mining operations in the country be now legalized and regulated. In the event this proposal receives the green light, it would mean that bitcoin mining operations would become legal in areas where this is a surplus of sustainable electricity. Russia had also announced earlier in the month that it owns Bitcoins worth $200 billion.
According to a local news agency, part of the proposal that was put forward by the Russian Ministry of Economic Development suggests a reduction in the fee that is required of data centers and mining companies for setting up their operations in the country. These data centers and mining companies would be established in specific regions in Russia. The ministry went on to say that power consumption by individuals would also be limited by imposing high energy rates. However, the report said that the energy thresholds were yet to be determined.
The ministry also noted that monitoring the consumption of energy would ensure that there is enough energy for infrastructure, social facilities, and housing. The report further clarified that crypto mining would be given the status of commercial activity by the ministry. This means that the government would be able to obtain revenue from the crypto mining sector by imposing a tax on the profits generated by crypto mining companies. After cryptocurrency mining was banned in China last year, Russia had become a prominent mining hub because many miners chose to shift their operations to the country due to cheap electricity.
The hash rate has grown significantly and it is believed that Russia is the third-largest country where bitcoin mining is carried out. Nonetheless, the regulatory framework pertaining to cryptocurrencies in Russia is uncertain at this stage. The various government agencies are divided in their opinion of how to treat these digital assets. The Bank of Russia has called for imposing a ban on cryptocurrencies due to the risks associated with them for investors. However, the finance ministry in the country has called for regulating cryptocurrencies in the country.
The Russian government had endorsed regulations for cryptocurrencies in the previous week, but the governor of the Russian central bank said that they would continue their opposition. Some of the notable institutions in Russia that are government-backed have also given their support for regulating cryptocurrencies. One of the top banks in Russia, Sber’s Deputy Chairman, Anatoly Popov said that they wanted cryptocurrencies to be regulated in the country instead of being banned. He said that their stance was the same as that of the Russian government because they believe that effective regulation can help organizations and citizens in acquiring cryptocurrencies legally. He also added that this could also be helpful in taxation purposes and AML mechanisms.
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