29 May 2020
Up to 7-year prison terms and large fines suggested for illegal issuance and use of cryptocurrencies by Russian politicians.
Illegal turnover of digital assets and cryptocurrencies is to be fined by up to 2 million rubles ($27,800) and punished by up to seven years in prison, as Russian lawmakers suggested.
The Russian business channel (RBC) reports that the draft amendments to the administrative and criminal offences codes have not yet been agreed into law, but that they were confirmed as genuine.
Punishments on a slider The suggested punishments would be incremental, starting with breaking the rules which govern digital currency transactions as payment for goods or services rendered being regarded as administrative offences.
Even though administrative offences are on the lowest end of the scale, assets can still be seized, along with fines to individuals which range from 20,000 to 200,000 rubles ($278 to $2,780). Fines from 50,000 to 400,000 rubles are meant for officials, and between 100,000 and 1 million rubles for legal entities.
For issuing digital currency or providing the means to it from within Russia, as well as for organizing illegal exchange of digital assets, the fines are about two times larger.
If major damage is caused to citizens, organizations or the state, these same acts can fall under the area of criminal violations, for which the punishment can be up to five years hard labor or seven years of prison time, along with much larger fines.
Purchasing digital assets for cash on Russian territory will also incur penalties, as well as transferring funds from cryptocurrency accounts to those in Russian banks.
The exodus of cryptocurrency companies The President of the Russian Association of Crypto-economics and Blockchain, Yuri Pripachkin, claims that a total ban on cryptocurrency is the consequence of the new laws. He added that Russian businesses will essentially be denied any benefit from this technology.
He believes that, if made law, these new rules could evict many companies out of Russia to neighbouring countries, where the jurisdictions are friendlier towards cryptocurrency related businessess, he stated:
“In fact, [the Russian government] is proposing to build a new iron curtain in the digital economy with its own hands.”
Russia has recently invested a lot of effort in regulatiing digital assets, since it has shown a fair amount of uncertainty over the past several years as to which direction to take on cryptocurrencies.