Experts argued whether this phenomenon has many risks
From September 1, the organization of cryptocurrency circulation may be banned in Russia. Such amendments were made to the new version of the bill on regulation of cryptocurrency mining by State Duma deputies. The current legal regulations prohibit payments in cryptocurrency, but not its circulation. What threatens the circulation of “crypto” among the people and why legislators decided to tighten legal requirements — in the material of MK.
Amendments to the new version of the bill on regulating cryptocurrency mining were introduced by State Duma deputies. Among the most discussed changes is the ban on the organization of cryptocurrency circulation in Russia from September 1 of this year. An exception is provided only for the Central Bank: the agency will have the right to use cryptocurrency circulation for test projects. The bill was adopted in the first reading on April 19. Then, on April 26, changes were made to the wording of the document.
The purpose of the bill to regulate cryptocurrency mining was to introduce this activity into the legal field. Initially, it was assumed that miners would be able to sell the mined digital currency in two ways — through foreign systems outside of currency regulation and through a special platform. In addition, the bill established a ban on cryptocurrency advertising. However, recent amendments may tighten the original legal provisions.
The reason for the change in the position of legislators towards greater rigidity could also be the latest events in the world of crypto. Let us remember that the crypto market has been shaken by a series of high-profile bankruptcies for several years now. For example, on November 11, 2022, the bankruptcy of the FTX crypto exchange was announced in the United States, whose clients lost $8 billion, another $1.7 billion from investors, and $1.3 billion from the exchange’s creditors. The general director of this structure, Sam Bankman-Fried, was later detained by American authorities in the Bahamas, and on March 28 of this year he was sentenced by a New York court to 25 years in prison.
Russia was not spared from crypto passions. In the Moscow City district of the capital, investors have been in the Federation Tower for 24 hours, demanding that the Beribit crypto exchange return their 400 million rubles of investment. At the same time, representatives of the company tried to escape through the back door, but they were caught up, telegram channels report.
According to the head of InDeFi Smart Bank, Sergei Mendeleev, the protests of cryptocurrencies are somewhat reminiscent of the protests of MMM players or casino victims — they are funny, ridiculous and useless. Specifically, the situation with the crypto exchange should be dealt with by law enforcement agencies, the expert emphasized. However, he was skeptical about the bill of the State Duma deputies. “The law banning the organization of cryptocurrency circulation will not protect anyone from anything,” Mendeleev believes. — Rather, on the contrary, everything will go from the gray, but still understandable zone into deep underground, where there will no longer be any rules. And if now law enforcement officers know where to go with requests for information on certain transactions, then after that they will be able to send letters “to grandfather in the village.” My value judgment is that the bill is not only useless, but also harmful: it could deprive Russia of one of the main opportunities to circumvent sanctions using cryptocurrencies.”
According to the vice-president of the Association of Lawyers for Registration, Liquidation, Bankruptcy and Litigation, Vladimir Kuznetsov, a total ban on the circulation of cryptocurrency, of course, can block the activities of crypto exchanges in the Russian Federation, but this is too clumsy a method of solving the problem. Moreover, the original goal of the bill is different — to bring all operations with digital assets in Russia under the control of the Central Bank. Based on this, the expert argues that the initiative is rather negative and is an example of the so-called hard law, when legislative regulation uses methods of strict and uncompromising control and prohibition. It would be much more appropriate to softly regulate the cryptocurrency issue, especially since Russia is declaring a course towards digitalization, the lawyer pointed out.
But there is another point of view. “90% of investments in cryptocurrencies are fraudulent,” said Vladimir Seleznev, an information security teacher at the Financial University under the Government of the Russian Federation. “This follows directly from their unclear legal status, from the fact that they are virtually not provided with anything, they have no support from any major state. Cryptocurrency is nowhere a means of payment and, strictly speaking, money. Any investment in such assets is risky. In my opinion, this area in Russia needs to be, if not banned, then very much limited.”
The mining law is based on the fact that our country has excess energy capacity that can be used in the production of cryptocurrencies. Mining rewards are growing all the time. And if it becomes possible to produce this currency in the country, it can be used for international transactions. However, now in a number of cases, halving occurs (from the English halving — “halving”) — this is the process of reducing the rate of generation of new units of cryptocurrency and, accordingly, reducing the size of the reward to miners for the mined block. This means that for the same work and production of crypto tokens, the reward will decrease. After a certain number of mined coins (crypto coins) the mining profitability is halved. Will mining be energetically profitable in the future? “The whole Bitcoin security system is based on the fact that these are expensive calculations and they require a lot of energy costs and it seems like this should add value. Controversial statement: if you burn $1 million, will it be valuable, will the ashes from this money be worth the capital lost by its owner? It’s the same here,” the expert gave an example.