How Did Bitcoin Mining in Russia Become Legalised

The crypto market rush is still on! After making a presence on centralized investment platforms, Russia legalizes crypto mining and trading in Bitcoin, which is a significant step that is set to boost local and regional economies.

This step comes after ongoing efforts by the BRICS countries to develop a payment system and a digital currency to strengthen the relations further and improve the BRICS bloc. On Thursday, August 8th, President Vladimir Putin signed a bill to permit Bitcoin mining in Russia, boosting the country’s trade potential amidst global sanctions. Let’s track the impact and motives behind this decision.

Russia Crypto Law

The crypto environment in Russia has always been a hot debate. Using cryptocurrencies has not been illegal. However, using Bitcoin and other virtual coins to buy and sell goods and services was prohibited. 

Only banks and certain financial institutions could deal with cryptocurrencies after registering with the country’s digital financial asset authorities. Crypto exchanges and brokers were subject to strict observation and reporting requirements, making their operations challenging.

However, the scenery is set to change after the recent reforms and political conditions. Russia restored its active role in the BRICS community, which entailed giving away its rigid crypto regulations to facilitate international trade.

BRICS Unified Economy

The BRICS nations have been actively engaged in economic and strategic talks this year to develop a unified financial structure, including a centralized USD-free payment system.

BRICS countries have been keen on these discussions to minimize the exposure to the Dollar’s spiking interest rates and dominance. More countries from developing economies have shown an increasing interest in forming alliances with the BRICS bloc.

This collaboration entailed legalizing crypto transactions and Bitcoin mining in Russia to face the sanctions from the SWIFT financial messaging protocol that blocked Russia from global payment systems.

Who Will Govern Bitcoin Mining in Russia?

The new law will enter into force in November 2024. It states that only legal entities and individual entrepreneurs who register with local authorities will be able to mine Bitcoin. 

Additionally, small businesses and individual users can start crypto mining legally if they do not exceed a given power consumption threshold. However, the law bans mass advertising of crypto mining and operations to minimize the overall market impact.

Russia Bitcoin mining will be governed by three governmental entities: an elected cabinet of ministers, the Ministry of Finance, and the Bank of Russia. These regulators will work on more detailed frameworks and regulatory requirements in the coming months.

This decision comes one month after the country legalized using cryptocurrencies in international trade, spurring economic growth and partnerships with regional and global partners.

Bottom Line

As a logical step in the ongoing economic and political developments, Bitcoin mining in Russia has become legal. The bill was signed on August 8th, with the law becoming effective in November 2024.

A coalition of Russia’s Central Bank, the Ministry of Finance, and elected ministers will oversee the crypto mining and digital asset environment and developer laws and regulations. This step is set to benefit Russia and BRICS countries by moving away from the dominance of USD and minimizing the impact of global sanctions on Russia.