New Russian proposal could see holders of bitcoin & other virtual currencies jailed if they fail to declare their assets

The Russian Ministry of Finance has proposed clamping down on cryptocurrency owners who attempt to hide their virtual assets, suggesting that rule-breakers could be sent to prison for up to three years.

This summer, a bill signed by President Vladimir Putin allowed for cryptocurrency assets to be counted on a par with physical assets, enabling Russian citizens to legally own cryptocurrencies from January 2021. It is hoped that recognizing these assets will help fight corruption and money laundering, a known use of currencies like bitcoin.

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According to Moscow business newspaper RBK, the proposed law could see Russians sent to prison if they are found to have failed to declare their cryptocurrency transactions in two of the previous three years, if they amount to over 45 million rubles ($585,000). For lower amounts, the punishment could be a fine, forced labor, or a short period of detention.

The ministry’s suggestion also includes requiring cryptocurrency miners to report their activities to Rosfinmonitoring, the Federal Financial Monitoring Service.

The bill is part of a broader package of cryptocurrency focused-legislation aimed at implementing regulations around the law signed by Putin in July. Prior to the new rules, virtual assets were in an unregulated grey zone. With this rule change, Russians will benefit from having the law on their side – the downside being they will no longer be able to keep their assets hidden. Cryptocurrencies will still be prohibited as a means of payment, however, so they won’t be used in the shops any time soon.

Last month, Russian Prosecutor General Igor Krasnov announced that Russian officials will soon be forced to declare if they have any cryptoassets, allowing the state to keep track of all civil servants’ earnings.

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