One of the biggest impacts waiting to hit Bitcoin and the rest of the cryptocurrency space is the firm hand of regulation. It is already starting with the Russian Ministry of Finance trying to arrest holders for failing to comply with regulations when it comes to disclosing provisions for valuation of cryptocurrencies.
Here’s what this new proposal says, and how this could create a butterfly effect around the world targeting cryptocurrencies.
How much bitcoin do you hold? Not to tell the Russian Ministry of Finance is punished with imprisonment
Before buying their first bitcoin or altcoin, cryptocurrency investors are given strict rules that must be followed by classic cars in the industry who have seen a thing or two in their time.
This advice includes never investing more than you would like to lose in capital, rely on two-factor authentication, and never reveal how much crypto you own. Unless the Russian government tells you to.
According to the new rules of the Russian Ministry of Finance, Bitcoin holders are targeted if they own more than a certain amount of the cryptocurrency in Russian rubles.
Russian citizens with a wallet address and transaction history showing a balance of 100,000 rubles or more are required to disclose this balance to the government. This is roughly equivalent to $ 1,300 and 0.12 BTC.
Related reading | The Most Common Bitcoin Scams And How To Avoid Them
Those who have a wallet or view transactions that result in a balance of 1,000,000 rubles or more and fail to disclose this information face jail time. The provision can be based on the increase in the value of the asset or on a sum of cryptocurrencies worth 1,000,000 rubles or more.
Failure to provide this information could result in a prison sentence of up to three years.
The rules are part of a new law by Russian President Putin that will come into force in January 2021. From the following tax year, Russian citizens must report all Bitcoin holdings above these levels, otherwise they run the risk of conflicting with the law.
BTCUSD Estimated Price Required for Possible Prison Time | Source: TradingView
Why this sets a dangerous precedent for crypto worldwide
Clearly, failure to disclose is a bad thing and can lead to legal problems or possible imprisonment. But it also sets a dangerous precedent that could impact the entire crypto industry around the world.
All it takes is someone to throw the first stone, in this case, which punishes it with jail time for failing to disclose cryptocurrency holdings.
Related reading | U.S. regulators begin fighting crypto and bitcoin crime
Recently, the IRS in the United States began enabling uses to indicate whether they owned or had virtual currency year-round. These virtual currencies include Bitcoin and Ethereum, as well as other cryptocurrencies.
Failure to properly report taxes is already illegal in the United States. In a sense, failure to disclose this information is already a criminal offense there too.
If the rest of the world follows suit, any remaining layer of data protection Bitcoin offers from the government will instantly fade out the window.
Selected image from deposit photos, charts from TradingView