In a significant move, the State Duma of Russia has suggested changes to the latest draft law on cryptocurrency mining, which includes a provision to prohibit the general circulation of cryptocurrencies effective from September 1. The main objective behind this proposal is to enhance the regulation surrounding digital currencies in Russia, aiming to manage their impact on the financial system.

The proposed amendments include a carve-out for experimental projects conducted by the Central Bank of Russia, which will be permitted under a special legal regime known as EPR. These projects are designed to investigate the potential and consequences of cryptocurrencies within controlled environments, thus aiding in making informed decisions on future regulations.

Originally introduced on November 17, 2022, the bill has undergone multiple revisions and technical clarifications before being passed in its first reading on April 19, 2024. Among the notable changes are specific criteria that define what qualifies as the organization of digital currency circulation in Russia. This encompasses transactions involving Russian legal entities or individuals living in Russia for more than 183 days per year, as well as transactions utilizing Russian information infrastructure.

Presently, Russian law prohibits cryptocurrency settlements while not explicitly banning their circulation. The new legislation aims to address this gap by setting up a definitive legal framework that limits the circulation of digital currencies, albeit with certain exceptions overseen by the Central Bank.

Initially, the bill also sought to regulate how miners could trade the cryptocurrency they generate, whether through foreign systems beyond currency regulations or via a dedicated platform operating within Russia's experimental legal framework. These amendments are part of a broader strategy to integrate mining activities within legal boundaries, with the potential for stabilizing the market and mitigating risks posed by unregulated digital currency operations.

This legislative initiative signals a methodical and cautious approach by Russian authorities towards adopting cryptocurrencies, with a focus on establishing a sustainable ecosystem that aligns with national financial and security agendas.