What do representatives of the mining industry of the Russian Federation think about prohibitive initiatives?
On January 20, the Bank of Russia released a report for public discussions, in which it proposed to introduce a ban on the issuance, circulation and exchange of cryptocurrencies in Russia, as well as the organization of these operations. The regulator also considers it necessary to ban the mining of digital assets and start monitoring Russian investments in cryptocurrency on foreign trading platforms, writes RBC Crypto.
Representatives of the Russian segment of the mining market reacted to the initiative of the Central Bank and explained their position on this issue.
“Investors are thinking about selling”
Co-founder of the blockchain company ENCRY Foundation Roman Nekrasov
The regulator came up with a proposal to ban mining, although for several previous years the Russian authorities had clearly signaled their readiness to legalize mining and allowed the import of equipment. Investors invested in enterprises in Russia with the expectation of a long stay in this country and fruitful work. They tried to act within the law: they honestly paid for electricity, did not hide what they were doing. And suddenly, at once, they are trying to make them almost the main enemies, because of which financial instability, environmental problems, and tax evasion. In general, not entrepreneurs, but malicious violators of everything that is possible. But it’s not.
There is no talk about relocation of equipment to other jurisdictions. Because it is not yet clear whether the ban will be adopted, and if so, in what form. But foreign investors thought about selling their equipment, which is located on Russian sites. Those projects that attracted Asian investors and investors from other regions will now face a decline in demand: no one is ready to invest in mining enterprises if there is no confidence at least for a couple of years ahead.
Operations with cryptocurrency can be banned, this is a very real scenario. But with mining – I hope this will not happen. In this niche, Russia has great prospects, very good conditions, and instead of banning, it is worth thinking about how to benefit both business and the state from the development of this industry.
“Innovative and high-tech sector”
CEO of the international mining company EMCD Michael Jerlis
We interact with all market participants. It is hoped that relocation will not be required. Now in Russia there is about 11% of the mining capacity of bitcoin, the Americans have more than 35%. I don’t think there are many in the government who want to give the US market share (hashrate), taxes, jobs. Moreover, the cryptocurrency can be used by the state to solve foreign trade problems bypassing the sanctions.
This is not the first time the Central Bank has criticized cryptocurrency. One of the main tasks of the Central Bank is to maintain financial stability. But the position of the state is formed taking into account the opinions of all participants. Let me remind you that at the end of last year, it was proposed to officially recognize mining as an entrepreneurial activity by the Ministry of Economic Development, the Ministry of Energy, and the State Duma. We are talking about an innovative, high-tech sector that holds the future and in which Russia has developed enormous competencies. One of our tasks now is to explain to the state how this sphere can be regulated without impeding development.
I would suggest paying attention to the experience of India, where from 2018 to 2020 there was also a ban on working with cryptocurrency for banks and other financial organizations. But in 2020, that ban was overturned by the Supreme Court. The authorities figured out the topic and realized that the cryptocurrency is easier to regulate: a ban will not achieve anything. I hope Russia will not have to repeat the mistakes of others.
“A powerful influx of investments”
Igor Runets, founder and CEO of BitRiver mining company
Now in Russia, according to BitRiver, about 300 thousand individuals and legal entities are engaged in the mining of bitcoin alone. At the same time, the total average revenue of Russian bitcoin miners per year is about $1.5 billion. Miners of other cryptocurrencies (Ethereum, Monero and others) earn about $2.5 billion a year. Thus, if income tax or personal income tax is levied on cryptocurrency transactions when converting to fiat funds, then the consolidated budget of Russia will, on average, receive more than 50 billion rubles annually. in the form of income. And this is only at the first stage.
In addition, the rational and balanced regulation of digital currencies and other digital financial assets, in addition to the function of replenishing the budget, will improve the quality of life of the population and the growth of the country’s economy as a whole.
If cryptocurrencies in Russia have their own specialized legislation, this will cause an additional powerful influx of Russian and foreign investments into Russia in the development of data processing centers (DPC) business with energy-intensive computing, in fintech projects, in the future in Russian data center equipment in the amount of over 100 billion rub. per year in the early stages.
In this regard, BitRiver and all subjects of the Russian digital currency industry hope that the Bank of Russia and the country’s law enforcement agencies will not establish and initiate bans on operations with cryptocurrencies in Russia and will continue to build a constructive dialogue with market participants. Russia today has a real opportunity to become a world leader in digital financial technologies.
“The decision is not made by the Central Bank”
Jahon Khabilov, CEO of mining pool Sigmapool
The Central Bank can come up with a legislative initiative, but the decision is made by the Parliament, in the form of amendments to the law or the adoption of a new bill, which must pass the State Duma, the Federation Council, and then the final decision is up to the President of Russia.
You need to understand that mining equipment is now in a big deficit, and this deficit will only increase. Companies in North America are now in great demand for such equipment, investing hundreds of millions of dollars in it, and the share of this region in bitcoin mining continues to grow rapidly.
The Central Bank is one of those who is important in the adoption of regulation. However, there are still positions of the government, parliament, presidential administration. Attitudes towards cryptocurrencies are still being formed, as this is a plastic and rapidly changing area.
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