Russia's Lawmakers Remove Definition of Mining From Crypto Regulations Draft Bill

  • The definition of cryptocurrency mining has reportedly been removed from Russia's regulatory bill on digital assets.
  • Russia's crypto bill has not been officially approved yet, as it's expected to be reviewed again in the next State Duma meeting on crypto regulations.

Russian lawmakers have reportedly removed the section that defines cryptocurrency mining from the country’s draft bill on digital asset regulations.

According to a local news outlet, the Interfax, the crypto-related bill’s next reading, or review, in the State Duma may now fail to clearly specify how Russian citizens are expected to file taxes on their earnings from mining.

Anatoly Aksakov, the chairman of the State Duma Committee on Financial Markets, explained why he thinks the Russian lawmakers have removed the term mining from Russia’s crypto regulations draft. Aksakov noted: 

Earlier we had some thoughts on Bitcoins, on their integration into our economic system. But as we decided we don’t need them, these ambiguous Bitcoins, therefore we don’t need mining as well.

Anatoly Aksakov

Mining Is "Senseless"

The seasoned Russian politician added that if a legal framework, or guidelines, for mining are to be developed, then they will also require that lawmakers define, or categorize, crypto assets. However, Aksakov thinks this is “senseless” as mining is not a legitimate business or industry.

If/when required, Russia’s tax authority will specify how to report taxable income from cryptocurrency mining, Aksakov noted.

It is currently unclear whether Russia’s bill still includes sections that formally define crypto tokens and initial coin offerings (ICO). It is also not clear at press time if the initial draft has any proposed rules in place regarding the operations of cryptocurrency exchanges.

The current version of the proposed crypto bill will now be officially reviewed in the Duma for the second time. Russian lawmakers refer to the crypto-related bill as “Digital Financial Assets” and first introduced it in January of 2018.

"Cryptocurrency" Removed From Bill In May

In March, a group of lawmakers from the Russian Ministry of Finance proposed adding a section on anti-money laundering (AML) and know-your-customer (KYC) guidelines to the bill - which has now become almost a standard requirement in the US.

In May, a basic draft of the crypto bill had been approved by the State Duma, however, the definition of “cryptocurrency” was removed by lawmakers before the (next) autumn session. At the time, mining was still included in the bill and defined as the “release of tokens to attract investment in capital.”

In September, lobbyists from the Russian Union of Industrialists and Entrepreneurs (RSPP) began preparing their own version of the cryptocurrency regulation bill. Elina Sidorenko, the vice president of RSPP, explained that the bill had categorized crypto assets into three distinct groups, in order to bring more clarity as the bill presented in the State Duma was considered to be “unfinished and unfragmented.”

Brazil's Ministry of Justice Reveals It's 'Studying' Bitcoin Over Potential Use in Crime

Brazils Ministry of Justice and Public Security, led by Sérgio Moro, has recently revealed through an interview that it’s ‘investigating« (studying) bitcoin, the flagship cryptocurrency, to better understand how it can be used in crimes.

The Ministry’s goal is to reportedly be able to understand the nascent technology it’s based on, and to potentially launch investigation norms authorities can use. Within the Ministry the National Strategy to Combat Corruption and Money Laundering (ENCCLA) is responsible for overseeing cryptocurrencies, and has been having regular meetings on the issue.

According to local news outlet Criptomoedas Fácil, the ENCCLA has over 70 agencies in it, and has revealed cryptocurrencies and blockchain technology have been debated with the goal of “deepening the study on the circulation of these assets to individuals and companies in Brazil.”

Speaking to the news outlet, the Ministry revealed:

Despite the good use that can be made of the new technologies regarding virtual assets, they unfortunately have also been used to commit crimes. The theme still poses challenges not only for our country but for the international community.

Camila Colares, director of the Asset Recovery and International Legal Cooperation Department (DRC) noted that there’s still a lot to discover when it comes to the topic, and as such the ENCCLA is set to continue looking into it with a criminal approach in mind.

Colares was quoted as saying:

The regulatory difficulty we have today is because we still do not know the potentialities - negative and positive - of these virtual assets.

Some of the so-called actions the ENCCLA has already taken to debate the topic has seen it create a glossary of cryptocurrency-related terms, create a survey on the typologies of money laundering and corruption through the use of cryptocurrencies, and hold a workshop on the use of cryptos with “national and foreign participants from the public and private sectors.”

The organization has also studied cryptocurrencies to understand how these can be used to launder money, and determined there’s a need for regulations that can prevent it to be used by criminals, although an exact approach hasn’t been determined.

It’s worth pointing out the cryptocurrency scene has been growing in Brazil. Last year the country launched a national blockchain association, and soon after a university within launched the world’s first master’s degree in cryptofinance. Earlier this year, the country’s new president Jair Bolsonaro shut down an indigenous cryptocurrency project.