Russia Considers Banning Uncontrolled Crypto Mining and Trading

The State Duma of Russia is set to consider a draft law aimed at restricting the circulation of cryptocurrencies in June. This proposed legislation seeks to ban uncontrolled mining and free circulation of cryptocurrencies, allowing only state-approved organizations to legally conduct such activities. The specifics of the approval process for exchanges, exchangers, and miners will be determined by the government after the law is enacted, according to Bits.media.

Advertising of cryptocurrencies, as well as their mining, exchange, and sale, will be prohibited. Duma lawyers have identified three main issues with the draft. Firstly, they seek clarification on whether all cryptocurrency activities are to be banned or if certain exceptions, such as mining, are allowed. Secondly, they need clarity on the state body responsible for regulating cryptocurrency sales, as the draft mentions multiple entities. Lastly, they advise standardizing the terminology regarding the government’s power to ban mining.

The draft law is currently awaiting comments from the Central Bank of Russia. Notably, businesses and miners were not consulted during the feedback process. Dmitry Machikhin, founder of the AML-service BitOK, believes that while cryptocurrencies will not be outright banned, their circulation will be heavily regulated and monitored. He suggests that legalizing the mining industry could be beneficial for the country, but the law’s practical implementation remains uncertain.

Critics argue that the law is unlikely to be effective. Ilya Boev, managing partner of Cryptotrust.one, notes that regulating peer-to-peer exchanges and international platforms is impractical. Alexander Kvaskov, president of the Association of Financial Technologies, asserts that strict regulation of the crypto industry is infeasible due to the rapid pace of innovation. He compares the situation to the USA’s Howey test, which relies on regulatory agencies and courts to determine an asset’s status rather than rigid laws.

Overall, experts believe that the proposed law, even if passed, will face significant challenges in enforcement and may not address the underlying issues in the crypto market.