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Russia could accelerate its trajectory to become one of the world's largest Bitcoin (BTC) and crypto miners, with reports that President Vladimir Putin has backed a move that could see the industry legalized and subject to government regulations.
Bloomberg reported that the move could be "good news" for the crypto mining industry, stating that "three people familiar with the matter" who asked not to be identified as the information is not public" confirmed Putin's position. They said the president had "supported" a "proposal by the Russian government to tax and regulate" mining, and had "rejected the Central Bank's proposal to ban it altogether."
However, the plan offers a number of limiting measures that the industry may not like: sources said the plan would "restrict mining to regions with excess electricity" including Irkutsk, Krasnoyarsk and Karelia. All three regions already have a large number of crypto miners, due to their favorable cold weather conditions and surplus energy.
The report noted that Kremlin spokesman Dmitry Peskov "refused to say where Putin stood" but added that the president had "ordered the government and the central bank to settle their differences," echoing Putin's own views. Putin's feelings at the beginning of the week.
Yesterday, Cryptonews.com reported that Putin took note of Russia's "certain competitive advantages" in crypto, "especially in the area of mining."
He specifically pointed out that the country has a surplus of electrical power, as well as “well-trained personnel” versed in cryptography.
According to data compiled by the University of Cambridge, as of late August last year, Russia was the third-largest bitcoin (BTC) mining nation in the world, behind only the United States and Kazakhstan.
However, this picture may have already changed dramatically. Many miners who fled China's cryptocurrency crackdown last year are believed to have moved to Russia. And Kazakhstan did pull the plug on many of its miners this winter following an energy price crisis, meaning Russia's grip on the global hashrate may well have exceeded 11,23% since August 2021.
Meanwhile, pro-crypto forces in the government seem set to push for “regulation, not bans” in response to calls from the Central Bank last week for a crypto and mining shutdown. .
According to RBC, the Ministry of Finance, which has, to some extent at least, defended the crypto industry against the staunchly anti-crypto central bank, has sent draft proposals to the government that, if accepted, would allow citizens to transact crypto. . Through the conventional banking framework, the provision of personal data about cryptocurrency holders has been made transparent.
A similar system, with anonymity removed from the equation, has already been implemented in South Korea, where all cryptocurrency trading must be done through exchanges that partner with domestic banks.
The ministry reportedly claimed that crypto regulation would benefit the Russian state and help increase tax revenue. The move, he says, will help police and other agencies uncover criminal behavior.
He also warned that a lack of regulation, or a blanket ban, would lead to a thriving black market for cryptocurrencies and would ultimately undermine the cryptocurrency industry in its bid for mainstream acceptance.
The move follows comments from several high-level parliamentarians, including committee chairs, who have denounced the central bank's repeated calls for a ban. Some have gone so far as to say that the Central Bank's position risks turning Russia into a "laughing stock" in the eyes of the international community.