- A new draft law in Russia would ban the purchase of Bitcoin and other cryptocurrencies.
- According to a prominent lawyer, the new law could throw an crypto ‘Iron-Curtain’ over Russia and paralyze interaction on the global digital stage.
Worldwide laws governing the trade and safekeeping of Bitcoin and cryptocurrencies continue to differ widely. Supposed paradises for blockchain companies, such as Switzerland or Malta, are considered to be the first port of call with favorable location conditions. Russia has so far remained neutral, but a new draft law could severely restrict trade in cryptocurrencies.
Russia discusses tougher measures and possible ban on Bitcoin
The Russian news portal RBC reports that a group of MPs has presented a bill to the Russian parliament that would virtually ban the trade and use of cryptocurrencies. Administrative and criminal liability is envisaged for violations of this new law. In the first part of the law, the illegal trade in cryptocurrencies as well as the payment for criminal services are mentioned.
Individuals would be subject to fines ranging from 50,000 to 500,000 rubles ($700 to $7,000), legal entities from 200,000 to 2 million rubles ($2,800 to $28,000), and civil servants from 100,000 to 1 million rubles, as well as a potential ban on employment. This first part is already firmly established in many countries around the world, but the second part of the bill is a declaration of war on the Bitcoin and crypto market.
According to draw, fines should be imposed if transactions are carried out with cryptocurrencies or if they are used as a means of payment for goods or services. In this case, a fine as well as the confiscation of the digital currencies is envisaged. Specifically, there will be fines for individuals from 20,000 to 200,000 rubles ($280 to $2,800), for legal entities from 100,000 to one million rubles ($1,400 to $14,000), and for officials from 50,000 to 400,000 rubles ($700 to $5,600).
The purchase of Bitcoin and cryptocurrencies with cash is to be completely prohibited, as is the sale of cryptocurrencies to generate revenue. Similarly high fines of up to one million rubles are to be introduced. If the violation causes particularly “great damage”, a prison sentence of up to 7 years may even be possible.
The chief tax attorney of Bryan Cave Leighton Paisner, a teacher at the Moscow Digital School Dmitry Kirillov, stated that the adoption of the law in this edition of the draft will mean the termination of the circulation of any cryptocurrency in Russia (freely translated):
People who currently own cryptocurrencies will be forced to get rid of them before the law comes into force or risk ‘going underground.’ Goals that will be achieved this way are the direct opposite of what’s being declared.
In general, the idea of dropping a crypto ‘Iron Curtain,’ in my opinion, does not contribute to the development of businesses or Russia’s interaction with the world economy on a digital level. There is nothing stopping the government from regulating the taxation of operations with cryptocurrency, making money legally and replenishing the budget.
Draft law leaves many questions unanswered
Roman Yankovsky, IP / IT practice consultant at Tomashevskaya & Partners, member of the Commission for Legal Support of the Digital Economy of the Moscow Branch of the Russian Bar Association, notes that according to the document, transfers between individuals are not covered by the provisions for administrative offences and the Criminal Code. However, this cannot be guaranteed, as these points are not clearly formulated, Yankovsky said.
Although the submitted draft has not yet been discussed and decided, such a regulation would completely prohibit the trade with Bitcoin in Russia. It therefore remains to be seen how the Russian parliament will decide on this. A final approval or rejection is expected by the “end of spring”.