The Ministry of Finance proposes very harsh prison sentences for those who hold crypto without reporting them … but does not punish irregular exchanges

Russia’s restrictive regulatory system for crypto transactions seems to have an incredible blind spot: there is no criminal liability for criminals who use digital assets to conduct illegal transactions.

On Thursday, the Russian Ministry of Finance proposed new amendments to the crypto laws in an attempt to clarify the rules on tax evasion. According to the proposed guidelines, Russian citizens who fail to report two or more transactions of at least 45 million rubles (about $583,000) over a period of three years risk up to three years in prison.

A previous ministerial proposal recommended prison sentences of three years for anyone who fails to report transactions of more than 1 million roubles ($13,000).

Citizens must also report transactions Crypto Code and wallets exceeding 600,000 roubles ($7,700) over the course of a year, under penalty of a fine of 50,000 roubles ($640).

Strangely enough, the new guidelines do not provide any punishment for criminals who use cryptocurrency for illegal transactions.

Maria Stankevich, head of business development at the EXMO exchange, told Cointelegraph:

“There is no criminal liability for those who use the illegal crypto markets or the physical exchanges in Moscow that launder huge amounts of dirty cryptocurrency. Basically, what the government is trying to do is prosecute citizens instead of creating tough rules against malicious criminals in this area (as the UK does for example).
Mikhail Uspensky, a consultant with the Russian law firm Taxology, said that the Ministry’s new guidelines also ignore the so-called “grey exchange” which accounts for the majority of unofficial transactions.

Speaking to the Russian press agency RBC, Uspensky said:

“It has been decided not to apply criminal law to [the grey exchanges], while normal owners of crypto assets risk harsh penalties”.

Russia’s tightening grip on crypto owners comes at a time when public decision-makers are seriously considering launching a CBDC. The Bank of Russia is also expanding its studies on the subject in the wake of the COVID-19 pandemic, which has had a destabilising effect on the country’s monetary policy.

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