Cryptocurrency

The Ministry of Finance of the Russian Federation proposed amendments to the Code of Administrative Offenses with fines for illegal circulation of CFA and cryptocurrencies

The Ministry of Finance proposed a draft amendment to the Code of Administrative Offenses of the Russian Federation with administrative responsibility for the illegal circulation of digital currencies and digital currencies, including the organization of trade and acceptance of payments.

On February 8, a draft federal law “On Amendments to the Code of Administrative Offenses of the Russian Federation” was sent to the Presidential Administration of the Russian Federation for consideration. The bill was submitted to the Government by the Ministry of Finance and is now at the stage of collecting feedback from ministries and departments.

According to the proposed change in the Code of Administrative Offenses, administrative liability will be provided for illegal traffic, violation of the rules of transactions and illegal acceptance of digital currency. It is considered illegal to issue and circulate digital currency and digital currencies by organizations and individuals not registered in the special register of the Bank of Russia. As part of the amendments, the following penalties are proposed:

 

  • For the illegal issue of digital financial assets and / or for violation of the rules of transactions with them: 50,000 – 500,000 rubles for citizens, 100,000 – 1 million rubles for officials, 200,000 – 2 million rubles for legal entities;
  • Acceptance of payments in digital currency for goods and services: 20,000 – 200,000 rubles for citizens, 50,000 – 400,000 rubles for officials, 100,000 – 1 million rubles for legal entities. Additionally, it can be carried out by confiscation of the subject of an administrative offense.

 

The participants in the consultations noted that the adoption of the amendments may serve as a reason for the departure of cryptocurrency companies to the shadow sector of the economy and will become a “deterrent to the development of the CFA market.”

According to the Ministry of Economic Development and other participants in public consultations, the proposed amount of fines is “unreasonably overstated, taking into account the degree of public danger and potential consequences.” In addition, the proposed draft law does not provide for a transitional period for the introduction of regulation. If the bill is adopted, the Ministry of Economic Development proposes to set a delay in its entry into force of at least one year.

According to the comments, legislators should concretize situations of illegal acceptance of payments in cryptocurrencies for goods and services. This is necessary in order to exclude administrative liability in cases where the payment occurred without the knowledge of the legal entity or was erroneously recorded in the information system.

At the moment, consultations are continuing on the proposed amendments and further changes in the draft law are possible. After agreeing on the amendments, the bill will be submitted to the State Duma, and then it will have to go through the Federation Council and receive the president’s signature. 

Recall that in July last year, Russian President Vladimir Putin signed the law “On digital financial assets (DFA) and digital currency.” The law came into force on January 1, 2021. This law does not provide for specific penalties for its violation, as a result of which it was necessary to amend the codes.

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