Bitcoin miners in Russia are concerned about sanctions as the government begins collecting wallet addresses

Bitcoin miners in Russia are expressing concerns over a new government registry that collects sensitive data, including cryptocurrency wallet addresses. This registry, which has been operational since November 2024, is part of Russia’s effort to better regulate the cryptocurrency industry. The registry is managed by Russia’s Federal Tax Service, and it has already received registration requests from about 150 miners within the first few weeks.

Russian lawmakers, including Anton Gorelkin, who is overseeing information policy, have raised alarms about the potential risks associated with this registry. Gorelkin warned that if the registry data were to leak, it could expose Russian Bitcoin miners to international sanctions, providing geopolitical adversaries with valuable information. The government has tried to reassure miners, with the Federal Tax Service claiming that the data is stored in a highly protected internal system and that access is restricted. Gorelkin emphasized that external access is “practically impossible,” and despite frequent concerns about data leaks, the agency has claimed that the risk of a breach is now near zero.

However, concerns remain, particularly given the history of data leaks in Russia. In 2024, Russia’s communications watchdog, Roskomnadzor, recorded 135 data leaks that exposed over 710 million records. These leaks occurred despite companies facing minimal fines for data breaches. The Russian government later passed a law significantly increasing the fines for data breaches, from 100,000 rubles (around $1,000) to a maximum of 15 million rubles (around $150,000).

While Russia’s crypto mining sector is not directly targeted by international sanctions, some companies have still been impacted. In April 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned BitRiver AG, a Swiss-based holding company with operations in Russia, marking the first time a crypto mining company was directly targeted. In March 2024, OFAC expanded its sanctions, hitting 13 Russian entities, including several fintech firms, for allegedly helping to evade sanctions through cryptocurrency services.

This growing concern over data security and the potential for further sanctions reflects the tension between Russia’s crypto mining industry and international regulatory bodies. The new registry, while aimed at improving regulatory oversight within Russia, could inadvertently expose miners to further scrutiny and potential punitive measures from foreign governments.