Secret Chancellery: Russia will tighten responsibility for illegal mining
Illegal cryptocurrency miners continue to overload networks under the guise of household consumption, causing damage to the economy in the tens of billions of rubles annually. In order to bring mining out of the shadows and protect the energy systems of the regions, an urgent bill was submitted to the State Duma introducing administrative liability for violations of mining requirements. The legislators emphasize that the goal is not to ban, but to "whitewash" the industry through harsh measures. Details can be found in the Izvestia article.
What will be the responsibility
A bill on administrative liability for violation of mining requirements has been submitted to the State Duma. The document proposes to establish responsibility commensurate with the public danger of acts for violating requirements and prohibitions when carrying out digital currency mining activities, the State Duma Committee on Energy told Izvestia.
It is assumed that violation of the ban on mining digital currency, including participation in the mining pool, on the territory of the subject of the Russian Federation and its individual territories, in respect of which such a ban is imposed, will entail the imposition of an administrative fine: on citizens - in the amount of 100 thousand to 150 thousand rubles with confiscation of the relevant equipment, and for legal entities — from 1 to 2 million rubles. or administrative suspension of activities for up to ninety days (with confiscation).
Other novelties relate to the failure of the miner to provide information about the receipt of digital currency, the implementation of mining by those who do not have the right to do so, the provision of services by the mining infrastructure operator to individual entrepreneurs and legal entities included or excluded from the register of persons engaged in mining, violations of the procedure for submitting relevant information to the responsible executive authority. The maximum amounts of fines proposed in the bill reach 5 million rubles, the relevant committee said.
Lawmakers explain the need for innovations by saying that the energy load from hidden farms leads to capacity shortages and accidents, which requires an immediate response.
— This poses a threat to the safety of citizens and the reliability of the energy system, as well as entails a number of negative social and economic consequences. Among the consequences for the energy system are a shortage of power, including mains, an increase in the load on the power grid and their wear and tear, the inability to connect social facilities and new housing, fires and accidents. Cross-subsidization of the electric power industry is growing. The economy is suffering, including budgets at all levels, because commensurate taxation is not regulated by the current legislation of the Russian Federation," said Nikolai Shulginov, Chairman of the State Duma Committee on Energy and former Minister of Energy of the Russian Federation.
The Chairman of the State Duma Committee on Construction and Housing and Communal Services focuses on stimulating business.
— Our task is not to introduce prohibitive measures, but to stimulate the legalization of mining activities through high-quality regulation. No investments will come to a place where illegal activities are comfortable," says Sergey Pakhomov.
As explained in the press service of the Federal Tax Service (FTS), administrative responsibility will not apply to household miners, that is, individuals engaged in mining within 6,000 kilowatt-hours per month, since such persons are not subject to inclusion in the Register of persons engaged in mining digital currency.
Regulators strengthen control
Illegal mining of cryptocurrencies primarily slows down the development of the industry itself, which recently received legal status in the Russian Federation, experts say.
— At the moment, illegal mining is perhaps the key constraint on the development of the entire industry. Largely due to the "gray" and "black" mining, regulators are forced to impose strict restrictions in the regions, and the industry itself suffers from a negative reputation, which makes it difficult to apply for the introduction of system support tools. In my opinion, the key strategic objective of mining is the cost—effective use of low-margin and unclaimed energy resources, rather than searching for cheap electricity by any means possible to the detriment of other electricity consumers," says Denis Cherepanov, an expert at NTI Energynet and CEO of the Ugra Gas Union.
As emphasized in the State Duma, the bill does not aim to destroy "home" mining, it is only proposed to introduce reasonable taxation for it.
— For illegal mining of cryptocurrencies, the bill introduces high fines, confiscation of mining equipment, disqualification of officials and suspension of enterprises. This will contribute to the legalization of the industry, where from November 2024, only individuals within the energy consumption range of 6 thousand kWh per month have the right to mine without being included in the register of the Federal Tax Service. For comparison: This is more than 20 times the average electricity consumption of the average Russian household," said Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market.
Elena Avakian, Adviser to the FPA of the Russian Federation, head of the digital transformation of the legal profession, notes that the changes should be introduced in stages.
— Extremely high fines, suspension of activities and confiscation of equipment are expected to be imposed as sanctions for illegal mining. This seems extremely difficult to implement, as it will require the regulatory authority to have operational and investigative powers to identify the facts of illegal mining, as well as the authority to secure the seizure of mining facilities," she says, noting that the market, in principle, has a negative attitude towards any excessive regulation.
Control and investment
The Russian Bar Association draws attention to the importance of registers and limits.
— The central supervisory authority will be the Federal Tax Service as the person responsible for maintaining the register of persons engaged in mining. At the same time, energy companies will also play a supporting role in identifying anomalies in the amount of electricity consumption. Rosfinmonitoring will carry out financial supervision by integrating with energy companies and banks through the Transparent Blockchain platform for transaction analysis. The bill does not affect the right of individuals — "home" miners to the right to mine without registration, provided they consume up to 6 thousand kWh per month, thus, formally, small miners retain the opportunity to continue their activities without registration, Ilana notes Brightly.
Artyom Kartashov, CEO of Mining Depot, highlights the interagency approach proposed by the bill as a positive development.
— Control over the activities of miners will not be assigned to any one department. Instead, it is planned to build a comprehensive interdepartmental model, where each participant is assigned a role based on his existing competencies. Thus, control will become systematic and technologically based on existing data from the energy market and tax administration, the expert says.
Impact on business and energy
Angela Tsyganova, Managing Partner of Smart Consulting, analyzing the proposed sanctions, predicts an increase in transparency and notes that the bill does not propose blocking the networks themselves.
— The law does not prohibit home mining. A citizen can engage in mining without registering as an individual entrepreneur and without being included in the register of the Federal Tax Service, but only if his consumption does not exceed 6 thousand kWh per month. Ultimately, legal work is more profitable than the risk of fines for both illegal mining and tax evasion," says lawyer Stanislav Komissarov.
Anton Gontarev, Commercial Director of Intelion Data Systems, assesses the risks for "gray" schemes.
— If we talk about the attractiveness of Russia for foreign investors in the field of blockchain technologies, the effect will be twofold. For institutional investors and large infrastructure partners, the emergence of administrative responsibility usually means increased transparency: it becomes clear who has the right to operate, what requirements need to be met, and what risks arise if the rules are not followed. The most sensitive law, of course, will be for household mining," he says.
International experience and prospects
Vladimir Tutkevich, Director of the CFA Russia Association, compares Russia with the United States.
— The general approach to mining cryptocurrencies in the United States is that as a result of this activity, a product is created that is treated by the government in much the same way as any other business. Mining cryptocurrencies in itself is not a licensed activity and does not require separate permits, but certain parameters of this activity fall under existing legislation, which has been specially clarified for it. The main type of penalties that threaten individuals and organizations engaged in mining is in the tax sphere," he notes.
Andrey Alekseev, the founder of Digital Capacities, sees advantages for large players and predicts a redistribution of the load.
— From the point of view of foreign investors, regulation, on the contrary, increases the attractiveness of the jurisdiction. Large capital does not enter the "gray" zone: transparent rules, clear requirements and predictable responsibilities are important to it. The legalization and regulation of mining will lead to a more rational distribution of energy consumption," he says.
The head of the MFUA Department, Tatiana Satskevich, clarifies the mechanism of shutdowns. She notes that the legislator has provided for increased administrative responsibility for recidivism in the field of mining. So, for a repeat offense, the fine for citizens will be up to 1.5 million rubles, for officials and sole proprietors — up to 5 million rubles, and for legal entities — up to 10 million rubles. Equipment will also be confiscated in all cases.
Alexey Mikhailov, head of the special project at the Financial University under the Government of the Russian Federation, emphasizes the role of the Federal Tax Service in regulating the mining of cryptocurrencies.
— The Federal Tax Service is the central authority: it maintains registers of miners and infrastructure operators, and receives reports from them on the received cryptocurrency. Energy companies are a key source of operational information. Constant abnormally high consumption, especially in the residential sector or in forbidden regions, will be a signal for inspections," he says.
Anton Averyanov, CEO of ST IT and TechNet NTI expert, emphasizes that it is now important for lawmakers to work directly with business representatives in order not to lose possible substantial profits for the state.
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