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The Russian government has submitted a bill to parliament proposing that entities “carrying out activities related to the organization of digital currency circulation,” and operating without a license from Russia‘s central bank, could be subject to criminal liability, including fines of up to $4,000 and four years in a forced labor camp.
A draft bill submitted to the State Duma on April 17 would amend Russian law to criminalize certain digital asset services offered without regulatory approval or a Bank of Russia license, forcing many traders to buy and sell digital assets through commercial banks.
As things stand, digital assets remain largely unregulated in Russia. However, in March, the government approved a package of draft laws aimed at regulating digital currencies and digital rights, as part of a broader effort to ‘de-shadow’ sections of the economy. The bill to criminalize unlicensed digital asset services appears to be another step on this journey.
“This bill proposed to introduce criminal liability for carrying out activities related to the organization of digital currency circulation without registration or without a special permit,” the government wrote in the draft published by the State Duma last week.
Specifically, the bill mandates that the “organized” selling of digital currencies “without a central bank license constitutes a criminal offense.
Punishment for falling foul of the law could be severe, as without registration with the Bank of Russia, “ordinary” offenders could face fines of up to $4,000 and up to four years in forced labor prison camps. Meanwhile, for operators of larger digital asset exchanges, the cap on fines will be $13,000, with courts instructed to jail executives for up to five or seven years.
The bill also includes clauses regarding digital asset miners, including penalties for industrial miners who fail to declare their activities to the state.
The government hopes that, if passed, the bill and its associated punishments will boost transparency and “reduce the risk of financial crime.”
Russia digital currency legislation
Last week’s bill joins the package of draft laws approved by the Russian government in March, aimed at establishing a structured framework for digital asset operations, including rules on trading, intermediaries, and market access.
The package of bills included: “On Digital Currency and Digital Rights,” “On Amending Certain Legislative Acts of the Russian Federation,” and “On Amending the Code of the Russian Federation on Administrative Offenses.”
If passed, the legislation would prohibit transactions involving digital currencies without regulated intermediaries—an act that, as of last Friday, the government is also now seeking to criminalize.
However, Russian residents would be permitted to use foreign accounts to purchase digital currencies abroad and to transfer foreign currency purchased through Russian intermediaries, as long as they notify the Federal Tax Service of any foreign transactions.
Non-qualified investors will also be able to purchase the “most liquid” digital currencies included in the Bank of Russia’s list, but only after passing testing and if the purchase is within the central bank’s limit—no more than 300,000 rubles per year through a single intermediary.
Meanwhile, “qualified investors” would have no limits on the amount they could purchase.
“The plan envisages issuing licenses for digital currency operations to digital depositories and organizations engaged in digital currency exchange, as well as admitting existing professional market participants—exchanges, brokers, and trust managers,” Russia’s Ministry of Finance said, in a March 30 press release. “The legislation provides for the modernization of the circulation of digital financial assets, utility digital rights, and hybrid digital rights.”
The Ministry also confirmed that banks and brokers conducting digital currency operations would be subject to specific prudential requirements.
The package of laws, along with the criminalization bill submitted to parliament last week, represents a substantial shift in approach from the Russian government, which has previously appeared content to allow a somewhat free-for-all with digital assets in the country.
The changes, should parliament approve them—and it’s unclear when this may happen—may be a double-edged sword for digital asset firms, as while they provide more clarity and transparency to a previously grey area, they also come with new obligations and restrictions.
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