Russian Ministry of Finance Proposes 7 Years of Imprisonment for Issuance of Cryptocurrencies

News and Analysis

Russian ministry of finance proposes to introduce a punishment of seven year-long imprisonment for issuance of money surrogates including cryptocurrencies, Interfax reported with a reference to the agency’s sources in the ministry.

The notification as to preparation of relevant amendments to the Criminal Code of Russia was published on March 10 on a site dedicated to regulatory framework disclosure. However, the document’s text has not been officially published yet.

According to Interfax’s sources, individuals will have to face up to 4 years of imprisonment or a penalty fee of 500,000 rubles (over $7,000 at current exchange rate), while top managers of banks and financial institutions may go to jail for 7 years, lose a right to hold some positions, or pay a penalty fee of 2.5 million rubles (nearly $36,000 at the time of writing).

The ministry believes usage of money surrogates may facilitate involvement of individuals and companies in illicit activities, including money laundering.

The minisrty has been vocal about its intents to criminalize cryptocurrencies for a long while. Back in September 2015, it considered 2 years of imprisonment (in case of a collective crime), or a penalty fee of 500,000 rubles. The first edition of the same draft law from 2014 provided for administrative responsibility only, and involved no imprisonment.

However, Elvira Nabiullina, head of the Russian Central Bank, has stated on numerous occasions that the bank is going to research possible usage of cryptocurrencies, while seeing their risks related to some ‘dubious’ operations like terrorism funding. German Gref, head of the country’s biggest state-owned bank Sberbank, stated that cryptocurrencies shall not be subject to banning.

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