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Russia proposes fines of up to 2 million rubles and 7 years in prison for the illegal use of cryptocurrencies

May 22, 2020

Russian lawmakers have proposed punishing up to 2 million rubles ($ 27,800) and seven years in prison for illegally exchanging digital assets and cryptocurrencies.

As reported by the Russian retail channel RBC, the draft amendments to the codes for administrative and criminal offenses were received, but have not yet been legally agreed.

Levels of sanction

The proposed penalties are small and start with administrative penalties for violating proposed rules for transactions that use digital currencies to pay for the goods or services provided.

Russia proposes fines of up to 2 million rubles and 7 years in prison for the illegal use of cryptocurrencies
Russia proposes fines of up to 2 million rubles and 7 years in prison for the illegal use of cryptocurrencies

In this case, the property can be seized, along with fines ranging from 20,000 to 200,000 rubles (USD 278 to 2,780) to individuals, from 50,000 to 400,000 rubles to employees, and legal entities can be fined between 100,000 and 1 million rubles.

The fines apply to the organization of the illegal traffic of digital assets or the provision of funds for the issuance of digital currencies on Russian territory.

The same act can be considered a criminal offense if it does great harm to citizens, organizations, or the state. This results in higher fines and up to five years of forced labor or seven years in prison.

There is also a fine for buying digital assets for cash on Russian territory and transferring cryptocurrency funds to Russian bank accounts.

Migrate cryptocurrency companies

Yuri Pripachkin, president of the Russian Cryptocurrencies and Blockchain Association, says the new legislative package essentially includes a complete ban on cryptocurrencies and will not allow Russian companies to benefit from this technology.

He believes that the new rules, if implemented by law, could lead to a massive exodus of Russian companies to move to neighboring countries with more encryption-friendly jurisdictions.

In fact, the Russian government is proposing to build a new iron curtain in the digital economy with its own hands.

Russia has not known in which direction cryptocurrencies should go for several years, although it has recently taken more concrete steps to regulate digital assets.