Ministry of Finance vs. cryptocurrencies: who will win?

The Ministry of Finance of the Russian Federation has proposed the introduction of criminal liability for non-declaration of cryptocurrencies. The term for undeclared could be up to three years. Experts consider the amendments to be excessively harsh.

The Russian Ministry of Finance has presented a new version of a package of bills to regulate the circulation of cryptocurrencies in Russia. They include amendments to the Criminal Code, the Code of Criminal Procedure, the Code of Administrative Offences, the Tax Code and the law on combating money-laundering, writes Kommersant.

The previous version of the amendments was already assessed by the market as a significant restriction of circulation in Russia. In the current version, the picture has been exacerbated. In particular, owners of digital currencies must report transfers and receipts to the tax service if the amount of assets is equivalent to 100 thousand roubles per year.

Non-declaration by a physical person of an amount of more than 1 million rubles per year, passed through a cryptocurrency wallet, entails criminal liability for up to six months or a fine of up to 300 thousand rubles.

Refusal to declare an amount of a particularly large amount (more than 5 million rubles) is punishable by a fine of up to 500 thousand rubles or imprisonment for up to three years.

The Finance Ministry also proposes that foreign exchanges, exchangers and other organizations report to the tax authorities on the operations of Russians with cryptocurrency every quarter.

The use of cryptocurrency in the commission of crimes will now be considered an aggravating circumstance.

The ministry has sent the updated documents to the concerned agencies, including the Ministry of Finance, the Ministry of Internal Affairs, the Federal Tax Service, the Prosecutor General's Office, the Central Bank and others.

The Ministry of Finance emphasizes that there are still no final decisions on the regulation of digital currencies in principle: global practice and FATF recommendations offer two options - controlled circulation or a complete ban, and both are being discussed.

По словам сооснователя Exante Анатолия Князева, столь суровая ответственность представляется непропорциональной сумме нарушений. Очень вероятно, что законодатели до сих пор не могут определиться, где поставить запятую во фразе «легализовать нельзя запретить»»,— считает он.

And the document in this part was obviously hastily drafted, since the text suggests the introduction of criminal liability for legal entities, which, according to Dmitry Zakharov, general director of the Moscow Digital School, simply does not exist in the Russian legal system.