The Russian legislature has been moving to ban the use of cryptocurrencies like Bitcoin (BTC) within its country.
Included in their proposal are administrative and criminal liabilities once individuals are found in violation of the ban on cryptocurrencies.
Administrative and criminal liabilities are included in the bill
According to the bills presented to the Russian legislature, they will be punishing those who will be using BTCs in financial transactions.
Individuals found guilty of using their BTCs to make payments may face up to seven years of imprisonment and a fine of up to US$7,000 [AU$10,693].
Cryptocurrency issuers and operators may also be slapped with fines that can go as high as about $28,000 if they do not have the approval of the Russian central bank.
These administrative liabilities aim to prohibit the use of cryptocurrencies on transactions made in Russia’s market. It also aims to further enforce the existing regulations on the use and issuance of digital assets in Russia.
Criminal liability is also incurred if their violations create major damage to citizens or organizations and if such actions lead to the enrichment of the actors on a large scale.
If the law passes, buying cryptocurrencies with cash or its transfer to any Russian bank account will be criminalized as well.
If found in violation of the provision on purchasing cryptocurrencies, a fine of up to $14,000 will be levied to the offender. They may also face imprisonment of up to four years.
Draconian punishments such as forced labor of up to five years can be levied on large scale violations.
As of this writing, the bill is already received by Russia’s Ministry of Economic Development. According to Anatoly Aksakov, head of the Duma committee on the financial market, the version is still a work-in-progress.
Expert: Bill might only make it harder for Russian authorities to regulate cryptos
According to Dr. Dmitry Galushko, the director-general of OrderCom LLC, the ban will only create more problems for the crypto economy in Russia:
“If the Russian Federation plans to create a digital economy, then a completely different approach is needed—not to ban, but to provide an opportunity to develop innovative ideas and projects, technologies.”
Dmitry Kirillov, a senior tax lawyer at Bryan Cave Leighton Paisner, also said that if the bill gets passed, it might make regulation of cryptocurrencies more difficult for the Russian authorities:
“People who now own the cryptocurrency will be forced to get rid of it before the law enters into force or risk going underground.”
How Russia’s move to ban cryptocurrencies will play out and affect the blockchain industry of the country remains yet to be seen.