The Russian Ministry of Finance has suggested changes to criminal law punishing undeclared crypto wallets holding more than 1 million rubles ($13,000, at press time). This comes as Russia increases regulation of crypto assets with sometimes contradictory statements.
Fine then… fine
The Russian Federation’s financial regulator has proposed a new version of crypto regulation law, Russian business newspaper Kommersant reported on Sept. 24.
Two sources told Kommersant that the ministry plans to make laws that control digital assets stricter. This new law would make lying to the government about crypto assets a criminal offence.
The new rules comes with harsher punishments, too. Undeclared crypto assets worth more than 1 million rubles ($13,000) could land a holder three years in jail. Thus, the law could end the anonymity of crypto wallet addresses.
The new regulations would obligate both individuals and corporations to declare all income from crypto assets tallying over 100,000 rubles ($1,300) to the Federal Tax Service of Russia. Violating the law would result in a 50,000 ruble ($650) fine or 30% of the crypto assets, whichever is higher.
The method by which offenders could be discovered and how the Tax Service could confiscate the funds remains unclear.
Give it Time
Russian citizens have some time to get their ducks in a row. If adopted, the law would give crypto holders until April 30, 2021, to declare their assets, according to Dmitry Kirillov, a tax attorney with Bryan Cave Leighton Paisner LLP.
The declarations are not limited to private Russian citizens and companies. Under the new law, foreign exchanges, exchange services, and custodians must present quarterly reports to the Russian Tax Service.
Confusing Tax Laws
This is not the first proposed change to crypto tax laws in Russia. On Sept. 3, the Ministry of Finance proposed laws that would make receiving mining rewards illegal, while leaving mining within in the law. The proposal also would make crypto transactions illegal except in a few cases, such as bankruptcy or inheritance.
Overall, the Russian crypto community has reacted negatively to these legal propositions. BeInCrypto Russia reported that the president of the Russian Association of Cryptoindustry and Blockchain felt crypto should be seen as a growth industry in Russia, rather than an excuse to take away citizens’ rights.
Sergey Gustun, a Russian tech developer with trading platform 3commas, reacted on Twitter. He couldn’t picture crypto exchanges complying with new legislation. “Google hasn’t given a s— about our laws for years. Why would Binance?,” he said.