A bill has been drafted by Russia’s Finance Ministry in which they have proposed harsh consequences for any person who doesn’t report their crypto assets that are above a certain limit. These penalties include fines and jail terms. This new bill, which addressed the movement of crypto in the country, was sent by the Russian Ministry of Finance to interested departments of the government. This was reported by a local news outlet. According to the publication Kommersant, the bill comprises of amendments that were made to the Russian Criminal Code, the Tax Code, the Administrative Code, the Criminal Procedure Code, and the law on combating money laundering.
As compared to the previous bill, the main changes made in this one have to do with the obligations of the country’s citizens to declare their cryptocurrency activities, along with the contents of their crypto wallets. The ministry has proposed that users and exchanges should be required to inform tax authorities about the crypto transactions they are conducting. Kommersant reported that the market had seen the previous draft bill as a threat to the circulation of cryptocurrencies in Russia. But, as it turns out, the new draft bill is even stricter than the first one.
The new bill states that any individual who has received digital rights or digital currency in excess of 100,000 rubles in a year, which is the equivalent of $1,280, will have to inform the tax authority. Furthermore, they would have to submit a report annually, providing details of transactions related to their assets, along with their balances. According to legal experts, if these amendments are adopted, then people will have to submit the first report by April 30th, 2021 for the 2020 tax filing year. A 30% fine will be imposed on crypto assets if anyone fails to report, but it wouldn’t be less than 50,000 rubles.
It was also noted by the legal experts that foreign cryptocurrency businesses, including crypto depositories and exchanges, would have to send quarterly information to the tax authority about their Russian crypto operations. Since many are not likely to take this seriously, liabilities haven’t just been restricted to fines. The new bill declares it a criminal offense and can result in three years in prison if a crypto wallet, which has had more than 1 million rubles ($12,796) passed through it in a year, is not reported. In fact, forced labor could also be used as a punishment.
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According to experts, these amendments are quite harsh and some are of the opinion that the penalties are disproportionate to the offenses. It was also emphasized by the Ministry of Finance that they are considering the recommendations made by the Financial Action Task Force (FATF). However, they said that no final decision had been made regarding the regulation of cryptocurrencies in Russia. It was also confirmed by the Ministry of Justice that they are considering the proposed bill for adoption in regard to the law on digital currencies and digital financial assets that will be put into effect on January 1st, 2021.