The Russian territory presents a plethora of opportunities as far as the cryptocurrency industry is concerned.
Arguably, a proper legal environment would potentiate Russia’s crypto capacities to become a hub of virtual assets – there’s enough Russian talent to back the industry up.
However, it appears that Russia has lagged behind when it comes to the establishment of crypto hotspots as the lack of proper legal infrastructure happens to be a glaring challenge in the eyes of digital asset enthusiasts.
In recent news, the Russian Ministry of Finance has proposed a move that will create legislation to restrict the circulation of cryptocurrencies within the economy – a decision that will serve as a yardstick for global crypto regulation.
Russian media intimated that the Russian government intends to prescribe amendments to the existing Digital Financial Assets (DFA) law, which was ratified in July and is set to be implemented from the first month of 2021.
Ideally, the DFA law came about as a result of the Russian government’s need to enable transactions involving digital securities and tokens, including well-established cryptocurrencies like Bitcoin and Ether.
At the time of inception, the DFA law was meant to be coupled with a separate piece of legislation targeting the regulation of crypto circulation.
The Plan to Criminalize Cryptocurrency
While it appears that the Russian government was not heading towards an era of banning cryptocurrencies completely, the latest legal proposal is aimed at placing substantial restrictions on the industry.
The proposed legislations essentially concerns the administrative and criminal liability arising from cryptocurrency transactions that take place outside the boundaries of Russian law.
Still, experts have observed the ambiguity surrounding the definition of cryptocurrencies within the Russia territory, considering that a host of financial institutions perceive virtual coins as property. The fact that the latest proposal appears to categorize cryptocurrencies as property adds to the complexity of the matter.
In particular, the Russian Ministry has proposed the amendment to federal law that will see to it that virtual currency mining entities do not receive payments in the form of virtual assets. This restriction will still offer the leeway for crypto production, although miners will now receive payments in the form of fiat currency.
In addition, a clear ban on cryptocurrencies has been proposed to target all transactions involving digital money. The punitive measures prescribed by this legislation provide that citizens found to be circulating and transacting cryptocurrencies illegally will be fined up to 100,000 rubles (the equivalent of $1,324).
Further, a prison sentence of seven years has been prescribed – a significant contrast to the 1 million rubles ($13,240) in fines set for legal outfits found to operate in contravention to the proposed legislation.
The legislation also provided a clause that would allow the confiscation of cryptocurrencies held by exchanges through court orders. While this may seem to be a step in the right legal direction, enforcement may prove difficult.
Nonetheless, the proposed law is set to operate with the exception of contexts cutting across the issues of inheritance, bankruptcy, and enforcement proceedings.