Russia's Latest Draft Bill Would Still Largely Ban Crypto, Stifle Miners

Russia's Ministry of Finance wants to ban any cryptocurrency payments, which could be bad news for the country's mining farms.

AccessTimeIconSep 3, 2020 at 5:15 p.m. UTC
Updated Sep 14, 2021 at 9:52 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The Russian Ministry of Finance has drawn up a new draft bill that echoes a previous attempt to outlaw cryptocurrency use and, if passed, would have a major impact on the nation's crypto miners.

The document, sent by the ministry to other government branches for feedback, states that miners located in Russia and using Russia-based infrastructure may not be rewarded for their work in cryptocurrency, according to the Russian newspaper Izvestia, which first reported the bill.

The draft is intended to amend a new law on digital assets signed by Russian President Vladimir Putin at the end of July.

Blow for miners

If the bill becomes a law, it might push individual miners outside of lawful operations, says Igor Runets, CEO of BitRiver, one of the largest mining farms in Russia. "They receive crypto as a reward [for recording transactions on the blockchain], and this becomes illegal," Runets said.

A way around this issue would be for a miner or mining farm to establish a foreign entity through which to conduct its finances, Runets suggested. However, the process isn't cheap, and wouldn't be an option for small miners that can't afford the legal costs.

The draft bill, obtained by CoinDesk (see below), states that the "actions allowing third parties to use digital currency, creation of software and hardware for issuance of the digital currency and transactions with it in the computer systems created by the foreign laws," are "not forbidden." However, accepting digital assets as a payment for such work would be outlawed.

The new rules could affect facilities in Russia that host clients' mining devices and get paid in cryptocurrency for the electricity and services they provide.

According to Jakhon Khabilov, head of the Sigmapool mining pool, currently only smaller mining farms in Russia accept crypto as payment, while larger ones are paid in fiat currency via bank transfers.

Prison threat

The bill includes stipulations from a previous draft, introduced into the Russian parliament but abandoned after a public outcry. Both state that Russian citizens can only possess crypto assets if they inherit them, receive them as debtors of a bankrupt company or receive them as compensation after winning a lawsuit.

The new draft also carries over the proposal that illegal issuance and usage of cryptocurrency, and accepting it as a means of payment, should be punished with fines of up to 1 million Russian rubles (about $13,240) or up to seven years in prison.

These measures were introduced in May but met strong criticism from the Russian crypto community as well as from the country's Ministry of Justice and Ministry of Economic Development. The draft did not become a part of the law that was signed by Putin in July.

See the full draft bill (Russian language) below:

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.