According to Bloomberg President Vladimir Putin is not going to follow the recommendations of the Central Bank of Russia which advocated banning cryptocurrencies of Russian territory. It still plans to regulate its extraction, in particular by imposing new taxes.
Putin plans to tax and regulate cryptocurrencies
Sources close to the matter said that Putin will not implement the Central Bank of Russia’s proposal. It’s a good news for many Russian companies who have based their business model on the blockchain. Cold regions, such as eastern Siberia, where electricity is abundant and cheap, have become new “eldorados”.
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According to the Bank of Russia, Russian citizens carry out transactions worth an estimated $5 billion (4.41 billion euros) per year with the various digital cryptocurrencies available in Russia. Aware of the weight that the extraction and the cryptocurrency transactions weigh on the Russian economyPresident Putin therefore prefers to regulate and tax them rather than ban them.
The country has many regions with a surplus of electricity, including Irkutsk, Krasnoyarsk and Karelia. What encourage the government to encourage mining. For its part, the Bank of Russia had opposed mining for environmental reasonsbut also because cryptocurrencies are used in most illegal activities, such as money laundering, drug trafficking, or the financing of terrorism.
Russia is the third cryptocurrency producing country in the world
Putin’s position, on the other hand, is good news for this industry, which has suffered many setbacks. China, for example, has decided to ban cryptocurrency transactions and mining on its territory. Putin calls on the government and the Central Bank to quickly find an agreement on how to regulate cryptocurrencies. In 2022, Russia became the third largest cryptocurrency-producing country in the world, after the United States and Kazakhstan, according to data from the University of Cambridge published in October 2021.
During a government meeting, the Russian President said that: “We have certain competitive advantages in Russia, especially in so-called mining. We have a surplus of electricity and well-trained personnel available in the country”. You should know that the mining of bitcoin, the most valuable cryptocurrency in the world, requires very powerful computers, used to solve complex problems. The biggest expense in mining cryptocurrencies is electricity.