Russia Advocates Domestic Crypto Infrastructure Amid Mining Boom

Russia's Federal Tax Service (FNS) head, Daniil Egorov, has advocated for the establishment of a domestic infrastructure to facilitate the legal sale of cryptocurrencies within the country. This call comes as Russia's crypto mining industry, which has been recently regulated, is predominantly selling its mined coins abroad, thereby hindering its growth. Egorov's remarks were made during an interview with the Russia 24 TV channel at the St. Petersburg International Economic Forum (SPIEF).

Egorov emphasized the importance of providing crypto miners with the ability to sell their digital coins legally within Russia. He argued that since cryptocurrency mining has been legalized, it is logical to offer miners a legal avenue to sell their mined assets domestically. He stated, "Naturally, there must be some kind of infrastructure on the territory of Russia, so that if they mined it legally, they could sell it legally."

Egorov also highlighted the inconsistency in the current regulatory framework, noting that it is illogical to allow mining but restrict the sale of mined cryptocurrencies. He pointed out that around 1,000 companies and individual entrepreneurs, along with 2,000 private citizens, are already involved in mining. The FNS had registered 722 miners as of April 1, including 116 "mining infrastructure operators" providing hosting services. Egorov expects these numbers to grow but acknowledged the challenge of bringing the entire industry out of the shadow economy, as miners consuming less than 6,000 kWh of electricity monthly are not required to register with the FNS.

Deputy Finance Minister Ivan Chebeskov revealed that only 30% of all participants in the crypto mining sector have registered with the FNS. He also disclosed that the Ministry of Finance and the Bank of Russia are discussing the legalization of crypto trading platforms within Russia’s experimental legal regime (ELR) for cryptocurrency operations. The ELR was proposed to facilitate the use of cryptocurrencies in foreign trade, given the severe limitations on access to the global financial system due to Western sanctions.

Chebeskov noted that while Russian investors can already buy crypto derivatives, there is no infrastructure in Russia to support the trading of cryptocurrencies. He suggested that existing exchanges could be utilized for this purpose. However, he emphasized that cryptocurrency trading should be available only to "highly qualified" investors with serious knowledge, understanding of these products, and significant capital to manage the associated risks. Despite this, he acknowledged that ordinary Russians use cryptocurrencies on a large scale, and any ban would have a negative impact. The main issue, he highlighted, is what to do with crypto exchanges operating outside the ELR.