The Central Bank of Russia to Back Conditional Crypto Mining for Selling Minted Coins Abroad

The Central Bank of Russia to Back Conditional Crypto Mining for Selling Minted Coins Abroad

The Central Bank of Russia has decided to back conditional mining of cryptocurrency, provided the proceeds from the activity are converted to fiat currency abroad. The current stance of the regulator follows after it changed its policy on the possible use of cryptocurrencies for international payment settlements.

The Central Bank of Russia to Approve Cryptocurrency Mining

The Monetary Authority in Moscow is now ready to approve conditional crypto mining if Russian miners can sell the minted coins outside the country. The Head of the Bank of Russia’s Financial Technologies Department, Kirill Pronin, has released a statement.

The Central Bank has maintained a hardline approach in the ongoing debate on the future of cryptocurrencies in Russia, proposing a blanket ban on most related activities earlier this year, including mining. However, strong opposition from other government ministries and departments and having to deal with financial restrictions imposed over the war in Ukraine have led to the softening of its stance in recent times.

Governor Elvira Nabiullina indicated last month that crypto payments can be permitted if they don’t "penetrate" the Russian Financial System. She also insisted that digital currencies like bitcoin should not be traded on Russian platforms because the assets are too volatile and risky for potential investors.

Speaking during the St. Petersburg International Legal Forum this week, Pronin noted that mining is outside the purview of the Central Bank of Russia (CBR). It is one way to acquire cryptocurrency in the form of fees for the validation of crypto transactions performed by miners. "The legalization of mining can be discussed, but several conditions, in our opinion, must be met in this regard," he was quoted as saying by Interfax.

Ivan Chebeskov, Director of Financial Policy Department, Ministry of Finance, pointed out that some large crypto mining companies based in the Russian Federation have also been forced to deal with foreign restrictions when withdrawing funds. He suggested that Russia may have to create its own exchange infrastructure to provide liquidity to the industry.

Kirill Pronin reiterated that, according to the CBR, the cryptocurrency minted by the miners in Russia should be sold outside its borders and not allowed to accumulate within the country. The point is to avoid creating incentives for its subsequent use in domestic payments.

Besides, the new bill "On Digital Currency," which is expected to comprehensively regulate Russia’s crypto space, a dedicated draft law "On Mining in the Russian Federation" was submitted to the State Duma in April. Members of the Lower House of the Russian Parliament propose to approve crypto mining as a business activity using Russian information infrastructure and equipment located in the country.