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Russia is getting serious in its regulation of the country’s cryptocurrency industry. The Ministry of Finance recently drafted a bill that will impose harsher penalties on those who fail to report their crypto holdings above a certain threshold, penalties that could include fines and jail terms.
The Russian Ministry of Finance has sent a new draft bill addressing some issues about cryptocurrency to various government departments, Bitcoin.com. According to the local news outlet Kommersant, the bill plans to introduce changes to the Tax Coe, the Criminal Procedure Code, the Russian Criminal Code, the law on money laundering, and the Administrative Code.
The proposed bill will compel crypto investors to declare the content of the cryptocurrency wallets as well as their crypto operations. The bill will also require both exchanges and their users to inform the tax authority on their crypto transactions.
The proposed bill set the threshold amount for reporting at 100,000 rubles, which is around $1,280. “In particular, any person (natural or legal) who has received digital currency or digital rights of more than 100,000 rubles [$1,280] in a calendar year is obliged to inform the tax authority and submit an annual report on transactions with such assets and the balances of these assets,” Kommersant reported.
Failure to do so could result in the seizure of a sizable portion of an erring investor’s crypto holdings. “For failure to report to the tax authority, you can get a fine of 30% of crypto assets, but not less than 50,000 rubles,” explained senior tax lawyer Dmitry Kirillov of Bryan Cave Leighton Paisner (Russia) LLP.
Foreign cryptocurrency businesses, such as depositors and exchanges, will also be required to submit quarterly reports to the tax authority on their operation in the country, according to Roman Yankovsky from the Moscow branch of the Russian Lawyers’ Association.
“The liability is not limited to fines. Non-declaration of a crypto wallet, if more than 1 million rubles [$12,796] have passed through it per year, becomes a criminal offense of up to three years in prison,” Yankovsky added. “Also, forced labor can be used as a punishment.”
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