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Anatoly Aksakov, Chairman of Russia’s State Duma Committee (parliament), announced that Russian lawmakers have been considering imposing fines on the mining of cryptocurrencies which are based on an open blockchain, like Bitcoin. This was revealed in an interview with Russian news outlet TASS.
Anatoly Aksakov said:
“I note that any operations with cryptocurrency that are contrary to the Russian legislation will be considered illegitimate. This means that mining, organizing issuance, circulation, creating exchange points for these tools will be prohibited. Administrative liability in the form of a fine will be incurred for such actions. We believe that cryptocurrencies created on open blockchains such as Bitcoin, Ethereum, and others are illegitimate tools.”
Holding Bitcoin Is Permitted
This does not, however, apply to the ownership of said digital currencies, provided they were acquired under foreign law, and that the point of sale and exchange were not in Russia. Aksakov was quick to say that the technology behind Bitcoin is improving, including the speed of transactions, and this would allow Bitcoin to gain popularity again.
The problem associated with transactions on blockchain was speed, and he is of the opinion that once the speed increases, interest will be quick to rise. He maintains that technologies like the Lightening Network are bound to spark interest among crypto investors, and the world at large.
Do the Mining Fines Apply to All Cryptocurrencies?
This comes soon after Russian central bank chief, Elvira Nabiullina, professing that she found it fortunate that the craze for cryptocurrency was ebbing away, and she also confirmed her stand against the legalization of cryptocurrency as a means of payment; according to her, cryptocurrencies’ circulation and creation of exchange points would make it an illegal act.
When does Crypto Mining Fines Will Take Effect?
President Putin set a deadline back in February, and Askakov was confident that the legislation would pass by June. “On Digital Financial Assets,” Russia’s most important crypto bill, saw approval by the parliament in May 2018, but required revisions and was sent to the first stages of reading, owing to the lack of detail in key areas, like crypto mining, cryptocurrencies, and tokens.
In addition, Russia has also postponed the adoption of its crypto legislation, owing to the Financial Action Task Force (FATF) of the G20 requiring the addition of crypto-related terminology on money laundering. Late June also saw Supreme Arbitration Court judge, Lyudmila Novoselova, emphasizing the need for the term “digital assets” in Russian Civil Law.
This decision to fine crypto mining is a shock indeed for those who actively participate in the process of creating additional digital coins.
What is the Future of Bitcoin in Russia?
Aksakov has stressed that these fines will not affect those who merely hold Bitcoin or open blockchain-based cryptocurrencies that were traded outside of Russia. It only applies to the mining, organization, issuance, circulation and the creation of exchange points of these virtual currencies, and this has been made clear. While cryptocurrency miners are still processing this fact, it remains to be seen what effect this has for Bitcoin price on the global market.
This is not, however, an isolated incident. June 9, 2019, saw reports that India was looking at the possibility to ban cryptocurrency, and was on the verge of drafting a bill which would ban individuals or groups from holding or trading in cryptocurrency. Offenders might have to face a 10-year jail sentence too.
This puts the future of cryptocurrency at a very precarious position, with countries being wary about trades in cryptocurrency. This could, in fact, affect that standing of Bitcoin and other cryptocurrencies worldwide. Those who are currently in possession of these digital currencies are at a loss as to how to turn this situation around, or at least get rid of these crypto tokens, while minimizing their losses.
Russia on average has very minimum knowledge about Bitcoin anyway, and a survey conducted earlier this year has proved that most Russians believe that Bitcoin is not a profitable investment. While more than half believe they have some amount of knowledge regarding Bitcoin, only 9% said they have detailed knowledge pertaining to its hows and why’s. 18% have merely heard the term Bitcoin, out of which 37% believe anyone can get it, while 12% already believe that it is banned. Most do not have high opinions on the security as well, with 29% believing that cryptocurrencies are easier to steal than conventional forms of currency.
With lawmakers gearing up for another anti-crypto bill presentation, defining cryptocurrency as an alternative form of property, it’s not just Bitcoin at stake anymore. While Aksokov has announced that there is hope for renewed interest to be sparked by newer technologies, it remains to be seen whether Russian law will accept the rise of crypto, if it does happen.
Russian Crypto Roulette
While this announcement is quite shocking, it does give enough time for those in possession of crypto assets to get rid of their tokens. In addition, since holding it is not an offence, crypto investors can hold on to it in hope that the law reverses, or some favorable step is taken.
This is a long shot, however, and the truth remains that Russia is one of the few nations that does not believe in the craze surrounding cryptocurrency. Its effect on the worldwide cryptocurrency market remains to be seen. Since the legislation has faced a number of obstacles, it is still not fully clear whether or not the bill will actually take effect in June.