In its latest bid to regulate the country’s digital currency industry, Russia’s Ministry of Finance amended its cryptocurrency regulation and laws, which has been adjudged harsh on the country’s growing crypto market.
The new amendment will see those who failed to declare certain Bitcoin and cryptocurrency transactions face a prison sentence. The proposed new law will go into effect in January next year and include crypto miners, exchanges, and crypto owners.
Crypto owners are mandated to report their crypto wallet balance and transactions to tax authorities if the total amount is more than 600,000 rubles (about $7,700) within a year. However, the ministry proposed a significantly lower threshold two months ago when it mandated taxpayers with over 100,000 rubles ($1,300) to report their transactions. Many observers think the minimum threshold for crypto holders is significantly too high compared to the industry’s previous minimum threshold.
Failure to disclose could attract a prison sentence
According to Russia’s local media outlet RBK, deliberately providing false information or failure to provide the required data to tax authorities twice in three years, is an offense. Punishment for failure to report small transactions includes a short period of probation, forced labor, as well as a fine.
However, those who have failed to report more than 45 million rubles within the period are required to pay from 500,000 to 2 million rubles. However, where it gets interesting is other punishments attached to the violation. The violator may face forced labor for about 5 years as well as 18 months – three years prison sentence.
Based on the package of bills, any non-declaration of Bitcoin or crypto transactions of 15 million rubles a year will face a minimum of 6 months prison sentence.
The law leaves criminals out
One of the major complaints about the new cryptocurrency regulations is the fact that the new law doesn’t have any provision to punish criminals who carry out illegal transactions using digital assets.
Many have spotted the critical blindspot and have called for further amendment of the law.
The new law is aimed at reducing money laundering
According to Russia’s Ministry of Finance, the proposed penalties are “in line with the FATF Recommendations.”
He also revealed that if the crypto taxpayers comply with the new law, it will minimize the number of money laundering-related transactions carried out by criminals in the industry.
Earlier in the year, the Russian government banned the use of cryptocurrency for payments. The ban was also meant to checkmate money laundering in the industry, according to the report on the ban.
