Russia’s New Cryptocurrency Law Expected to Come Into Effect Soon

Russian President Vladimir Putin recently signed a new law on cryptocurrencies that expands the legal framework for their mining and related infrastructure across the country.

Taking effect on November 1, the law allows the Russian government to strengthen its control over cryptocurrency mining while increasing its oversight of digital currency-related activities. This development marks a significant shift in Russia’s approach to cryptocurrency regulation.

Passed by the State Duma, the lower house of the Russian parliament, the law allows authorities to impose restrictions on cryptocurrency mining activities based on location. In certain regions, restrictions on mining can be imposed based on electricity consumption and regional energy capacity. In addition, the law allows for the regulation of mining-related infrastructure, including control of mining pools within certain areas.

The Act also expands access to the Digital Currency Address Database to a variety of federal entities, expanding from a single Federal Financial Monitoring Service to multiple enforcement and law enforcement agencies. This change enhances Russia’s capacity to tackle illicit financing in the digital currency sector.

The National Mining Registry will transition from the Ministry of Digital Development to the Federal Tax Service, which will monitor mining company registrations and delist companies for repeated violations of requirements. Private entities that use limited electricity will not be required to register.

This regulatory change comes at a time when Russian companies are facing increased sanctions from the US, UK and EU preventing cross-border transactions. To mitigate these sanctions, legislative amendments in July legalized cryptocurrency mining, enabling Russian companies to maintain trade routes, especially with allies such as China, Iran and India.