Russia is contemplating stricter regulations on cryptocurrencies to gain oversight of a market that has largely operated under the radar. The State Duma, the lower house of the Russian Parliament, is currently discussing a proposal to govern cryptocurrencies in the country. The draft law outlines a complete ban on cryptocurrency circulation starting from September 1, 2024, with exceptions for officially registered miners and projects approved by the Russian central bank.

Under the proposed legislation, only Russian businesses and individual entrepreneurs listed in a special register would be permitted to engage in cryptocurrency mining. Individuals can mine cryptocurrencies without registration if they comply with government energy consumption guidelines, which may deter casual miners from participating. The bill also prohibits the advertising and organization of digital currencies' circulation.

Russian miners will now be mandated by law to report to the tax authorities the total amount of cryptocurrency mined, along with the crypto addresses where the mined funds are deposited. This measure aims to prevent the misuse of these funds for illicit activities like money laundering or terrorism financing. Authorities will also have the power to restrict cryptocurrency mining in specific regions of the country.

The legislation, which was previously introduced in the State Duma, is now a top priority for Russian lawmakers. The rush to pass this bill is driven by the need to regulate crypto transactions amid challenges in international trade due to sanctions following the conflict in Ukraine. The finance ministry, central bank, and financial monitoring service have all expressed confidence that the law will be enacted by the end of the State Duma's spring session.

The new regulations are welcomed by electricity providers who have struggled to prove the commercial use of electricity by Russian crypto miners. The introduction of a registry for crypto miners is expected to address this issue. However, the lack of access to cheap electricity may force some miners out of business or to relocate to other countries.

Recent reports indicate that Russian authorities are planning to crack down on unauthorized crypto mining activities, including imposing fines on individuals exceeding their allocated electricity consumption. Measures are being considered to prevent residential homes from being used for crypto mining to mitigate power disruptions in certain regions. Penalties for such violations are proposed to be calculated based on commercial electricity rates.

Despite the stringent regulations, a Russian lawmaker clarified that the country does not intend to ban cryptocurrency transactions, criticizing sensationalized media reports for spreading misinformation instead of verifying facts.