Russia’s President Vladimir Putin has signed a law legalizing Bitcoin and crypto mining. The law is historic as the embattled nation has turned from a crypto enemy to a prominent adopter in recent years as it seeks ways to circumvent sanctions.
This comes as the Bitcoin price spiked above the coveted $60,000 milestone just a few days after “Crypto Black Monday”.
Crypto Mining Now Allowed In Russia
Russia’s invasion of its neighbor Ukraine altered many things for the pariah state. Western nations have imposed innumerable sanctions targeting President Vladimir Putin, Russia’s financial sector, and multiple oligarchs. These financial curbs have crippled Russia’s economy, positioning Bitcoin as an attractive alternative to help the citizens open up cross-border payments with nations and businesses that would otherwise be closed to them due to the foreign sanctions.
According to an Aug. 8 report by state-sponsored news publication Tass, Putin has officially greenlighted cryptocurrency mining in Russia. He signed legislation that creates regulations for the previously prohibited crypto mining industry in Russia, limiting the activity to entities and individuals who register through a state database with the Ministry of Digital Development. Small individual entrepreneurs can also mine cryptocurrencies without registering, but they should not exceed energy consumption limits.
The law will take effect on November 1, 2024. Notably, the newly legalized mining industry will be controlled by the Bank of Russia, the Ministry of Finance, and a select cabinet of ministers within the Russian government, who will independently formulate more specific regulatory provisions for mining pool participants in the coming months.
With this development, the crypto mining sector in Russia can now compete for Hashrate in established regions like the United States.
Russia seems to be acting to keep up with the US. Nation-level #Bitcoin FOMO is heating up.Their entry will boost the hashrate, strengthen network fundamentals, and diversify miner politics.Chinese mining pools control 57% of the BTC hash rate, while the US has 35%. https://t.co/n0pZNNvb0d pic.twitter.com/F1UATlCqo9
— Ki Young Ju (@ki_young_ju) August 8, 2024
Tass also reported Thursday that Russian citizens will also be allowed to trade cryptocurrencies. Still, the Russian central bank has overriding powers and can outlaw any activity it considers to be a threat to the nation’s monetary stability.
Russia’s Efforts To “Seize The Moment” In Cryptocurrencies
It’s worth mentioning that Putin has previously commented on mining digital assets. He said in 2022 that the country had “certain competitive advantages” in the sector because of its abundant electricity and availability of well-trained personnel in the country.
President Putin also recently emphasized the need for Russia to “seize the moment” by promptly creating a legal framework and regulation for the promising cryptocurrencies, developing infrastructure, and establishing conditions for the circulation of digital assets.
As ZyCrypto covered earlier, the Russian State Duma passed the crypto mining bill just one week ago, along with a second law that legalizes the use of digital currency to conduct cross-border settlements. The second bill still awaits Putin’s approval.
Meanwhile, the price of Bitcoin briefly rocketed above the $62,000 mark before retreating, following a market-wide rally that reversed steep losses from earlier in the week. BTC was changing hands at $60,833.23 as of publication time, a 24-hour rise of 5.9%, according to CoinGecko data.
