While Russia seemed to have taken two steps forward in the direction of cryptocurrency adoption in July, reports suggest that its Ministry of Finance now wants to ban payments with virtual currencies.
According to Russian publication Izvestia, the Russian Finance Ministry has proposed amendments to the recently passed bill ‘On Digital Financial Assets (DFA)’ that essentially provided a legal definition for digital assets and legalized the trading of cryptocurrency in Russia.
This initial bill is the precursor to a comprehensive cryptocurrency regulatory bill that will outline the full details of the regulatory scope for the industry. This bill, which is known as ‘On Digital Currency’, is expected to be drafted and published in December this year.
While the DFA bill was met with positive sentiment in Russia and beyond, this latest move by the Finance Ministry seems to be a step backwards in terms of cryptocurrency adoption and usage in the country.
Miners could be hamstrung, fines and jail time on the cards
Details from the document seen by Izvestia were seemingly focused on an amendment that would make it illegal for miners to receive rewards in Bitcoin or Ethereum, should they be adopted.
The amendments don’t seek to make cryptocurrency mining illegal in the country, but will look to completely clamp down on payments made using cryptocurrency in what was described as an ‘outright ban’ by the Russian publication.
The document also outlines administrative and criminal liabilities that could be faced by people making transactions with cryptocurrencies. If the amendments are accepted and implemented, people found guilty of breaking these laws could face fines of up to 100 000 Rubles ($1300) and up to seven years of jail time. Companies that are recognized as legal entities could face fines of up to 1 million Rubles ($13000).
These law amendments would effectively rule out the possibility of mining operations being remunerated for their efforts.
Amendments need to be revised
A number of industry experts in Russia were quoted as saying that the amendment document, which was circulated in a letter to various government departments, will need to be fully revised before it is adopted.
Another interesting caveat of the proposed amendments to the DFA were three exceptions that would allow for an individual to receive a cryptocurrency transaction. These are listed as the inheritance of cryptocurrencies, obtaining cryptocurrency through bankruptcy or enforcement proceedings, or having to transfer or transact with cryptocurrency at the behest of government officials or law enforcement.