The Russian Encryption Association requires the Ministry of Finance to clarify regulatory measures for encryption

On March 16, it was reported that recently, the Russian Encryption Industry and Blockchain Association (RACIB) wrote to Anton Siluanov, Minister of Finance, requesting clarification of the department’s position and measures on encryption. It is understood that the Ministry of Finance advocates criminal penalties for citizens and entrepreneurs engaged in encrypted mining. Alexei Moiseev, Deputy Minister of Finance of the Russian Federation, previously stated that it was necessary to amend the criminal law and provide for penalties for underground mining.

Interpretation of this information:

The Russian Encryption Industry and Blockchain Association (RACIB) has written to Anton Siluanov, the Minister of Finance, seeking clarification of the department’s position and measures relating to encryption. The Ministry of Finance has reportedly proposed criminal penalties for both citizens and entrepreneurs involved in encrypted mining. The suggestion follows previous proposals by Alexei Moiseev, the Deputy Minister of Finance, to amend criminal law and to provide penalties for underground mining.

The Ministry of Finance’s reported proposal for criminal penalties for citizens and entrepreneurs engaged in encrypted mining has caused some concern. The suggestion seems to signal the government’s intention to exert greater control over the use of encryption technology in the country. The government’s stance has previously been somewhat ambiguous – in 2019, the Russian Federal Security Service reportedly seized a number of servers involved in crypto mining, but no criminal charges were filed.

The RACIB’s request for clarification may serve to bring greater transparency to the government’s position on encryption. The organization has previously sought to promote the use of blockchain and other encryption technologies in Russia, and its letter to the Minister of Finance reflects its concerns that the proposed penalties may deter innovation and investment in the industry.

The proposal for criminal penalties for underground mining is also notable. The notion of ‘underground mining’ is used to describe the mining of cryptocurrencies without government authorization. It is likely that any penalties included in updated criminal law would seek to address this issue.

The proposed measures signal Russia’s desire to exert greater control over the cryptocurrency industry. This is in line with a broader global trend towards increased regulation of cryptocurrencies. The RACIB’s request for clarification may help to ensure that any measures put in place are proportionate and do not undermine the potential benefits of blockchain and other encryption technologies.