Russia Proposes Harsh Penalties For Unreported Cryptocurrency Holdings – Bitcoin News Regulation

The Russian Ministry of Finance has drafted a bill with harsh penalties for anyone who does not report their cryptocurrency holdings above a certain level. Penalties include imprisonment and fines.

New Russian crypto bill

The Russian Ministry of Finance has sent a new draft law to interested government agencies to distribute cryptocurrency in Russia, the local news agency Kommersant reported this week. The draft law includes amendments to the Russian Criminal Code, the Criminal Procedure Code, the Administrative Code, the Tax Code and the Anti-Money Laundering Act.

The main changes from the previous bill concern the obligation for citizens to declare their cryptocurrency operations, as well as the contents of their cryptocurrency wallets. The ministry proposes to oblige exchanges and users to inform the tax authority of cryptocurrency transactions.

Kommersant noted that the market sees the previous bill as a significant restriction on the circulation of cryptocurrency in Russia, and reported that the new bill is even stricter. “In particular, any person (natural or legal) who has received digital currency or digital rights in excess of 100,000 rubles [$1,280] in a calendar year is required to inform the tax authority and submit an annual report on transactions in such assets and the balances of these assets. “

Bryan Cave Leighton Paisner (Russia) LLP’s senior tax attorney Dmitry Kirillov stated that the first report must be submitted by April 30, 2021 for the 2020 tax filing year if the changes are adopted. He added:

If you do not report to the tax authority, you can get a fine of 30% of the crypto assets, but not less than 50,000 rubles.

Roman Yankovsky, a member of the Digital Economy Legal Support Commission of the Moscow Branch of the Russian Bar Association, noted that foreign cryptocurrency companies, including cryptocurrency exchanges and custodians, are required to submit quarterly information about their Russian cryptocurrency operations to the tax authority. While he believed that “hardly anyone will take this rule seriously,” he explained:

Liability is not limited to fines. Failure to declare a crypto wallet above 1 million rubles [$12,796] per year becomes an offense of up to three years in prison. Forced labor can also be used as a punishment.

Experts criticize that the amendments are too tough. For example, Malta-based broker Exante co-founder Anatoly Knyazev believes the penalties are disproportionate to the violations.

The Treasury Department also stressed that it is considering recommendations from the Financial Action Task Force (FATF), but noted that no final decision has been taken on regulating cryptocurrencies in Russia.

The Justice Department has confirmed that the bill related to the Digital Financial Assets and Digital Currencies Act, which will come into force on January 1, 2021, is being considered for adoption.

What do you think of Russia’s crypto proposal? Let us know in the comments below.

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