Russian Companies to Be Amerced for Bitcoin Operations

News and Analysis

Russian Ministry of Finance has developed amendments to the law”On the Central Bank”, which ban turnover and issuance of cryptocurrencies. The department has also prepared several amendments to the Administrative Violations Code, which impose stricter sanctions on businesses for issuance and turnover of cryptocurrencies.

The violating companies will be subject to administrative suspension of activities for up to 90 days, or a penalty fee to the tune of 3 to 5 million rubles (nearly $44,000 to 73,000 at the time of writing). The amendments have already garnered support from Russian Service for Financial Monitoring, the Ministry of Economic Development, as well as banks and lawyers.

“Ruble is the sole lawful currency of the Russian Federation. One ruble consists of 100 kopecks. Introduction of other monetary units and manufacturing/issuance of property rights objects, including those electronic, used as payment means, or means of exchange for monies not provided in the federal law explicitly (hereinafter referred to as money surrogates), and equally operations involving money surrogates are prohibited within the Russian Federation. Property rights objects arising from fulfillment of contractual obligations by parties under civil law, and used in order to stimulate procurement of goods, works, and services, are not considered money surrogates,” the amended Clause 27 of the law “On the Central Bank” reads.

The ministry proposes to introduce the penalty for issuance of cryptocurrencies in a brand new clause 15.16.1 of the Administrative Violations Code. Notably, the ministry’s spokespersons earlier claimed that corporate penalty fees would comprise 300 thousand to 1 million rubles (nearly $4,500 to 15,000 at the time of writing).

Additionally, the Ministry of finance has prepared a draft law, which introduces a penalty fee of up to 500,000 rubles (nearly $7,500), or up to four years of imprisonment for issuance, selling or buying money surrogates for individuals; or up to 1,000,000 rubles / up to six years of imprisonment for a group of individuals.

Those amendments do not cover the blockchain technology, which, according to the Ministry of Finance, shall be developing. The Central Bank’s final stance towards the issue will be vocalized following the completion of analysis by a dedicated working group.

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