New Russian law: Bitcoin miners are prohibited from earning Bitcoin

A new bill submitted by Russia’s Ministry of Finance would make it illegal for miners to accept rewards in cryptocurrencies such as Bitcoin or Ether, local Russian news outlet Izvestia reported today.

According to a copy of the proposal reviewed by Izvestia, if the proposed amendments to the Law on Digital Financial Assets come into effect, there will only be three situations in Russia where receiving cryptocurrencies would be acceptable: inheritance, bankruptcy, and acquisition of assets in enforcement proceedings.

In all other cases, including mining rewards, all operations with cryptocurrencies will be considered illegal for Russian citizens and businesses. Residents who violate the proposed law could face fines of up to 100,000 rubles (currently about $1,325) and up to seven years in prison. Legal entities could face fines of up to 1 million rubles ($13,250).

Lawyers interviewed by Izvestia noted that the amendments require extensive changes. Efim Kazantsev, managing partner of the law firm EK&P, described the measures proposed by the Ministry of Finance as “extremely draconian and in practice completely banning the circulation of cryptocurrencies in Russia.”

Other experts also said that while miners might come up with some legal structure to continue their activities under the new regulations (since mining itself would still be legal but not financially meaningful), this would not rule out liability risks.

Russia updated its crypto laws in late July. It's less stringent than previously proposed, but makes assets like Bitcoin essentially useless by prohibiting the purchase of goods with Bitcoin. The law recognizes digital currency as "a collection of electronic data capable of being accepted as a means of payment" and gives it legal status, but adds that it "cannot be used at the same time to pay for any goods or services."

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byAmy Liu

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