This week, the government of Venezuela has made crypto mining legal in the country but the news is actually mixed. On Tuesday, it was reported that a government department that is responsible for regulating cryptocurrencies has finally legalized the crypto mining industry. The Official Gazette published the good news and the head of the National Superintendency of Crypto Assets and Related Activities, Joselit Ramirez, authorized it.
According to it, a local entity that wants to mine cryptos must first take a few steps in regard to this process. The first one would be to apply for a mining license and then appear on a list on the government register.
Applicants will be requested to give information concerning the nature of the mining activity to the responsible authorities. They will also have to keep all mining-related records intact for a period of ten years, for future reference. The report also states that all mining data centers and mining equipment manufacturers will also have to apply for a special license to conduct operations. The Venezuelan authorities will act as supervisors for the manufacturing and importing of all mining equipment.
However, what is unusual about this legalization is that all crypto mining activities need to be performed through a National Digital Mining Pool, with harsh penalties awaiting those who break the law. The issue with this regulation is that the Venezuelan government will be able to control all income from the pool’s mining rewards and the payment to contributors.
This means that the government will be able to stop or delay payments and levy certain taxes even before payments have been made at any given moment. This is definitely not good news for miners and crypto enthusiasts who expected a little more freedom after this legalization.
The United States has sanctioned the Venezuelan government quite a few times and economic mismanagement in the country has long been a known issue. The Venezuelan President, Nicolas Maduro, has previously tried to bring foreign currency into the country through an oil-pegged cryptocurrency called the petro. The problem was that, according to the United States Department of Justice, cryptocurrency was actually used to hide some transactions related to illegal drug-running even if it’s still unclear whether or not it was through the petro or some other cryptocurrency.
At the same time, Joselit Ramirez, head of the National Superintendency of Crypto Assets and Related Activities, is a wanted man by the United States government. Corruption charges as well as links to some narcotics trade are also at the root of this undesirable status.