Crypto Mining Regulations to Solidify in Russia
Cryptocurrency mining is an interesting topic to discuss, outside of the technical facade that many people tend to focus too much on. It is more than just a hobby in the spirit of contributing to a global and decentralised project.
It can be a highly political topic, because mining activities can greatly impact many areas of society — from the economy and digital infrastructure to energy consumption and the environment.
For a nation, regulating cryptocurrency mining is as important as regulating the entry and exit points of the crypto space (i.e. crypto exchanges, crypto fund managers, payment gateways, etc.). It is, however, a monumental task.
Why crypto mining is difficult to regulate
Political representatives need to understand the complexities of fast-evolving blockchain technology. For example, they need to precisely define what crypto mining is and whether it should be discernable from network-validating activities involving the Proof of Stake protocol.
Any draft bills to enforce honest reporting by registered crypto mining or staking companies should be carefully written so as to avoid stifling potential businesses. This reporting may include the source of energy being used for mining, and the amount of crypto staked and earned, among others.
An attempt to regulate crypto mining activities could also become a highly sensitive topic. While it’s impossible for any authority to seize control of cryptocurrencies in circulation, regulations on crypto mining could give governments’ a chance on tightening their grip on the means of producing crypto assets.
Russia joins in at regulating crypto mining
The Russian Duma, the state’s legislative body, says it wants to start regulating crypto mining as a legitimate business under local business laws, reported on 9 September 2021.
The chairman of the Russian State Duma Committee on Financial Markets, Anatoly Aksakov, said that “[crypto mining] is a type of entrepreneurial activity, it is obviously necessary to include it into the state register, to regulate it as a type of entrepreneurship under an appropriate code, and impose relevant taxation.”
This month, Russia is one of the latest to consider further regulation of cryptocurrencies. Please note that this does not sound as bad as it is. As members of a society that works within a regulatory framework, regulation will drive further adoption of cryptocurrencies.
Regulating the crypto space must take time
A careful and methodical approach to regulating new technologies should be much preferred over haste decisions that can fatally ruin businesses that are already entangled with crypto assets.
The law must carefully consider definitions of every single “crypto jargon” invented in the last decade, and to decide how rules should apply to various types of parties (exchangers, traders, investors, banks, fund managers, etc).
“We still need to discuss what digital currency actually is…”, Anatoly Aksakov said, “…although we call it currency, it is rather used as a financial instrument or a financial asset that is subject to investment, rather than a means of payment.
Carbon-neutral crypto mining is praised in developed countries
What could arguably help public and government acceptance of crypto mining is carbon-neutrality. In many developed nations, a firm’s conscientiousness to the environmental, social, and governance (ESG) criteria is an increasingly public concern.
Crypto mining companies that use renewable sources of energy, such as hydroelectricity and geothermal energy, are often praised by the mainstream media. The crypto mining firm Canada Computational Unlimited (CCU), Inc. has recently been approved to go public, with the ticker ‘SATO’ — in honor of Satoshi Nakamoto, the inventor of Bitcoin.
The company claims to run entirely on hydroelectricity and plans to develop mining centers around the world. It has also gained the backing of True Global Ventures 4 Plus, which helped raise $100 million for the company.
Cryptocurrencies are an asset class that can never be shut down
Reading news about governments introducing laws around cryptocurrencies often makes investors and traders feel angst. They fear that laws can smother and kill cryptocurrencies, whether intentional or not.
It’s important to think about how extremely difficult it is for cryptocurrencies to be wiped off the face of the Earth. To make this happen, all governments in the world must agree with each other to shut down all mining and staking operations, and all the gateways to the crypto world.
When was the last time that every single government agreed on something so personal, such as a digital means to store value, and on killing a trillion dollar trading market? The probability of a complete wipeout of cryptocurrencies is atomic.
The worst thing that has ever happened to the crypto market when it comes to over-regulation was China’s crackdown on crypto mining in mid-2021. However, such an event made the crypto world stronger — it further decentralises crypto mining activities.
Like the mythological Hydra, a government’s attack on the crypto mining industry will just make it more numerous elsewhere in the world.