Russia has confirmed that buying cryptocurrencies will be legal in the country. Russian authorities are working on legislation to cover all aspects of the crypto space, including ICOs, currency trading and mining. Vladimir Putin has instructed legislators to have everything ready by summer of next year.
The situation is complicated as the industry is so new, and changing so quickly, that the space is not covered by existing legislation. Bringing it into the legal fold will entail much work creating new definitions to cover new concepts.
Deputy finance minister Aleksey Moiseev confirmed that trading in cryptocurrencies would be legal, provided they were not used for tax-avoidance or pyramid schemes, but hinted that there may be a crackdown on mining:
The penalties will be different, mostly administrative, but if someone created the cryptocurrency for the purpose of settlements, then there will be a criminal punishment,”
Previous proposals have included mandating miners to register with authorities and only allowing particular groups or individuals to participate in the market.
Russia’s Changing Crypto Position
Russia seems to be quickly changing its stance on cryptocurrencies. Last year there were suggestions that users of “surrogate currencies” could be punished with up to 7 years in prison but attitudes have thawed considerably as the potential for cryptocurrencies to help the economy are becoming clearer.
In October they announced the development of a state-backed CryptoRuble issued by the central bank. The hope is that this would offer transparency in transactions and dampen down fraud and tax-avoidance. Though blockchain-based it would not be fully decentralised.
There is also speculation that cryptocurrencies might offer Russia a way to circumvent international sanctions and sell its vast natural resources anonymously.
The official position on mining is less straightforward. Siberia has become a world centre for bitcoin mining thanks to its abundant supply of cheap hydroelectric power. There have even been calls for a new city to be built around cryptocurrency mining. Quite how the mining industry would fit in with the proposed legislation is currently unclear.