Russia proposes criminal penalties for unlicensed cryptocurrency service providers
New legislation would mandate that individuals and organizations obtain registration from Russia's central bank prior to providing specific cryptocurrency services, with violators facing monetary penalties and imprisonment.
The Russian government has forwarded new legislation to the State Duma, the parliament's lower chamber, seeking to modify the nation's legal framework by introducing criminal consequences for cryptocurrency service providers operating without proper regulatory authorization or appropriate licensing credentials.
According to a proposed law submitted to the State Duma this past Friday, Russian legislators have outlined that organizations "carrying out activities related to the organization of digital currency circulation" that function without obtaining proper licensing from the nation's central banking institution could face criminal prosecution and liability.
Operating without proper registration obtained from the Bank of Russia would expose individuals to financial penalties reaching up to $4,000, along with potential incarceration periods extending to four years, with enhanced punishments applicable for those functioning as part of organized criminal enterprises.
The same act committed by an organized group, or involving the infliction of damage or the extraction of income on a particularly large scale, would be punishable by compulsory labor for up to five years or imprisonment for up to seven years.
Additionally, the proposed legislation outlines that violators could receive a "fine of up to 1 million rubles [$13,100] or an amount equal to the convicted person's salary or other income for a period of up to five years."
This draft legislation comes as a follow-up to a series of bills originally put forward in March that incorporated criminal sanctions targeting illegal cryptocurrency mining operations, though the latest legislative proposal provides specific details regarding monetary fines and potential incarceration durations for anyone providing unregistered digital asset services without proper authorization.
As reported by RBC, a Russian media organization, the nation's Supreme Court has stated that the cryptocurrency legislation is missing "reasoned justification" to support the proposed criminal sanctions and penalties.
According to the court's assessment, the proposed measure appears "premature" pending Russia's implementation of its comprehensive "Digital Currency and Digital Rights law," which is scheduled to take effect in July. Should the proposed bill receive approval and pass into law, it would grant Russia's governmental authorities significantly increased control and regulatory oversight capabilities over the nation's cryptocurrency sector.
Russian crypto exchange Grinex still reeling from $14 million hack
Grinex, a cryptocurrency exchange platform based in Russia that is currently operating under sanctions, suspended all trading operations for its user base on Thursday following the loss of more than 1 billion rubles — approximately $13.7 million — in a cyberattack that the exchange believes was perpetrated by "entities of hostile states."
The exchange operator announced that it has transmitted all pertinent information concerning the cyberattack to the appropriate law enforcement authorities and has formally submitted a criminal complaint regarding the incident.