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Experts told what difficulties the authors of bills on cryptocurrency mining face, and what tasks the future law should solve
Despite the fall of the cryptocurrency market, the industry of their production in Russia continues to develop. Russia ranked 5th in the world in bitcoin mining according to the University of Cambridge at the beginning of this year. Its share in the total computing power of miners reached 4.66% by January.
Electricity consumption by miners in Russia is growing from year to year. Over the past 5 years, it has increased almost 20 times, 1,245.34 MW was spent on the production of the leading cryptocurrency last year in the country. According to the Estimates of the Ministry of Industry and Trade, the consumption of electricity for mining in Russia is comparable to the share of consumption of the agricultural industry.
Due to the lack of mining regulation, the issue of digital currencies is carried out in the “gray” zone. Lawyers told at what stage the development of bills on mining is, and what difficulties they face.
Versions of bills
Initially, the bill on mining was submitted to the State Duma by deputies from the New People party in April 2022, said Alexander Sharapov, a lawyer at KSK GROUP. But the document was withdrawn after the legal department of the State Duma gave it a negative assessment. In May, the New People introduced an amended bill, but it again received negative feedback, the lawyer said.
In parallel with the deputies, another bill is being developed by the Ministry of Finance by the Russian government, Sharapov said. He noted that given the need to obtain a positive conclusion of the Government on both documents, the draft law of the Ministry of Finance has much more chances than the bill “New People”.
The Central Bank also does not stay away from this issue, according to the expert. However, he recalled that the position of the Central Bank is opposite to the position of the Ministry of Finance and deputies from the New People party. The Central Bank proposes to completely ban the issue, circulation and possession of cryptocurrency on the territory of Russia, and for violation of the prohibitions a fine of up to 1 million rubles will be provided, Shaparov explained.
At the suggestion of the president
The main reason why the law on mining has not yet been adopted is that state bodies do not have a unified position on its regulation, says Yefim Kazantsev, an expert at Moscow Digital School. In his opinion, it may take a long time to develop a regulation that will suit all interested state bodies.
The adoption of a special law in the coming years could be forgotten at all, if not for the unfolding struggle between the Central Bank and the Ministry of Finance, which attracted the attention of the Russian president, the lawyer said. He explained that after the publication in January 2022 of the bank of Russia’s report “Cryptocurrencies: Trends, Risks, Measures” and its criticism from the Ministry of Finance, Russian President Vladimir Putin asked the Government and the Central Bank to come to a consensus and report on the results achieved.
Putin stressed that Russia has competitive advantages in the cryptocurrency sphere, especially in mining, Kazantsev noted. It was about the surplus of electricity and the well-trained personnel available in the country.
After that, work on the bill on digital currency went faster, the lawyer says. In his opinion, the most likely scenario is the adoption of a comprehensive law being developed by the Ministry of Finance.
“There is no point in adopting separate laws dedicated exclusively to mining. It is necessary to regulate both mining and cryptocurrency turnover. There are really enough issues that require legislative resolution,” Kazantsev said.
One of the main problems in the regulatory and legal regulation of the cryptocurrency market is still the lack of a legal definition of cryptocurrency, says Criminal Defense Firm lawyer Daniil Gorkov. According to him, for this reason, there is no definition for mining, the legal status of which is directly related to the legal recognition of a crypto asset in the domestic legislative system.
Thus, the federal law “On Digital Financial Assets” contains only a definition of digital currency, which in the most general form corresponds to the concept of cryptocurrency, as it is understood in the market, the lawyer explained. He added that the concept of mining has long been formulated from an economic point of view, but this term has not yet entered the legal field.
Compliance with conjuncture
Mine BillThe inge introduced by the New People party, in the absence of comprehensive legal regulation of the blockchain, would not be the worst “patch”, says the founder of LFCS Legal Support Yuri Brisov. He explained that the authors of the document tried to take a moderate position between the interest of the state in obtaining taxes and the interests of miners.
However, he did not expect the bill to be passed, as it contained many terminological inaccuracies. According to Brisov, the bill no longer corresponds to the conjuncture, since as a result of sanctions, the life of miners has changed. Miners need a clear roadmap from OKVED and tax benefits to income, payment of taxes and cryptocurrency turnover, the lawyer said.
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