- The law is getting tougher on cryptocurrencies in Russia as lawmakers propose a draconian law to curb the use of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) within the country.
According to the Russian publication, RT, members of the State Duma – Russia’s parliament – are proposing a 500,000-2 million rubles fine, or five to seven years imprisonment for the illicit use of cryptocurrencies in Russia.
While the law won't place a blanket ban on cryptocurrencies, some analysts say this move amounts to a total ban on crypto.
If the law passes, then crypto use in Russia; from activities like crypto mining, running a crypto exchange, trading, and transacting fiat-to-crypto through any Russian financial institution will be illegal.
According to the publication, the amendments on the financial assets bill proposed fines from 50,000 rubles ($706) to 500,000 rubles ($7,000) for individuals that earn a “large income” from crypto. The bill further proposes a 2 million Rubles ($28,240) fine on legal entities that help in these illicit transactions, transfers and issuance of cryptocurrencies in Russia.
Notwithstanding, users who use crypto payment channels will be liable to a fine of 20,000 rubles ($280) up to 200,000 rubles ($2,800). Legal entities accepting crypto transactions will be fined from 100,000 rubles ($1,400) up to 1 million rubles ($14,000).
The Confused State of Russian Crypto Users
Amidst the recent change of heart from the Russian government on cryptocurrency operations, many investors remain perplexed about what direction the Russian government is taking.
Recently, the Bank of Russia (BoR) released a revised bill on the regulation of digital assets across the country, banning the issuance of crypto due to the inherent risks of the industry.
“We believe there are big risks in legalizing the operations of the cryptocurrencies. From the standpoint of financial stability, money-laundering prevention and consumer protection.” – Alex Guznov, BoR head of legal office speaking on the revised crypto bill, March 2019.
However, the Russian Federal Ministry of Economic Development recently proposed new legislation to legalize crypto, as well as blockchain-based initiatives through a special regulatory framework.