Russia Adopts Law Regulating Digital Assets: What to Know

Russia’s State Duma has approved a new law regulating cryptocurrency mining and the circulation of digital assets. The law will come into effect 10 days after its official publication.

Presented by Anatoly Aksakov in November 2022, the bill faced delays due to departmental disagreements but was finalized in April 2024 and passed its first reading on July 24, 2024.

Russia’s Digital Asset Law Explained

The new law delineates the requirements for cryptocurrency miners in Russia. Only companies and individual entrepreneurs registered in Russia, and listed in the register of mining infrastructure operators, are permitted to mine.

Home miners won’t have to register with the regulator, provided they adhere to energy consumption limits set by the Russian government. The Ministry of Digital Development will maintain the register, while the Bank of Russia will set criteria for inclusion.

Miners with criminal records for economic crimes, or those specified under Federal Law No. 115-FZ ‘On Countering the Legalisation of the Proceeds of Crime (Money Laundering) and the Financing of Terrorism’, cannot participate. The law also allows the government to ban mining in specific regions.

Read more: Top 9 Crypto-Friendly Countries For Digital Assets Investors

To monitor the industry’s financial impact, miners must report their earnings and wallet addresses to an authorized body, with the frequency and scope of reporting determined by the government. The Federal Financial Monitoring Service will track addresses involved in illegal activities or money laundering. Non-compliant miners risk disconnection from the power grid and legal consequences.

The initial version of the law banned the use and sale of mined cryptocurrency in Russia, but lawmakers removed this restriction. Alongside the new mining rules, Russian platforms are now permitted to trade in foreign digital financial assets (DFA) under the oversight of the Central Bank. The regulator has the authority to ban specific coins if they pose a threat to financial stability.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

The new framework also prohibits advertising cryptocurrency and related services to prevent the public from investing in high-risk financial instruments. This includes bans on advertising cryptocurrencies like Bitcoin, services related to their use, and methods for buying or selling them.

In addition to The State Duma Committee on the Financial Market approved draft law No. 341257-8 in its third reading. The bill originally focused on experimenting with crypto-payments in foreign economic activities. However, the revised version now empowers the Central Bank to set rules for the organized trading of digital currencies within this experimental framework.

Russia May Use Bitcoin to Trade With El Salvador

The Russian Central Bank has long opposed any cryptoassets. However, external circumstances are gradually forcing the regulator to reconsider its stance.

As BeInCrypto reported earlier, El Salvador has proposed using cryptocurrency, possibly Bitcoin, to address its trade challenges with Russia. This proposal forms part of El Salvador’s broader strategy to strengthen economic ties with Russia and bolster its geopolitical position.

Alexander Ilyukhin, the first secretary of the Russian embassy in Nicaragua and head of the office in El Salvador, disclosed this initiative. He noted El Salvador’s pioneering decision to adopt Bitcoin as legal tender.

“Within the country, any tourist can pay for any services with Bitcoin. But in our country, Bitcoin is not widespread, so we are looking for other ways to strengthen trade. The government of El Salvador is ready to continue economic cooperation with Russia,” Ilyukhin said.

Read more: Top 3 Methods for Cross-Border Money Transfer Using Crypto

El Salvador has maintained an independent foreign policy, refraining from siding with any party in the Russia-Ukraine conflict. While Ukrainian President Volodymyr Zelensky’s team has sought El Salvador’s support, Ilyukhin stated they have not yet succeeded.

The country is also considering joining the BRICS economic bloc, which includes Brazil, Russia, India, China, and South Africa. BRICS has been actively pursuing de-dollarization, turning to cryptocurrencies as an alternative to the US dollar.