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Russia’s extensive oversight of cryptocurrency transactions appears to have a crucial blind spot: There appears to be no accountability for criminals using digital assets to conduct illegal transactions.
On Thursday, the Russian Ministry of Finance proposed new amendments to the country’s cryptocurrency laws that seek to clarify the rules on tax evasion. Under the proposed guidelines, Russians can face up to three years in prison for failing to report transactions of 45 million rubles ($ 583,000) or more at least twice in three years.
An earlier proposal from the ministry recommended three-year prison terms for anyone not reporting transactions of more than 1 million rubles ($ 13,000).
Citizens must also report transactions and wallet amounts that exceed 600,000 rubles ($ 7,700) in a calendar year. Failure to notify in time could result in a fine of 50,000 rubles ($ 640).
Oddly absent from the new guidelines is any responsibility for criminals who continue to use cryptocurrency for illicit transactions.
Maria Stankevich, head of business development at the cryptocurrency exchange EXMO, told Cointelegraph:
“We see no criminal liability for the dark cryptocurrency market or for the money exchangers in Moscow who are still processing large amounts of dirty cryptocurrencies. Basically, what the government is trying to do is prosecute citizens instead of creating solid rules for bad market players (like the UK does for example). “
Mikhail Uspensky, a consultant for Russia-based law firm Taxology, said the ministry’s new guidelines also ignore so-called “gray cryptocurrency exchanges” which account for most of the shadow market transactions.
“It was decided not to apply criminal liability to them and the main risks of prosecution should be transferred to ordinary owners of cryptocurrencies,” Uspensky told Russian media RBC.
Russia’s crackdown on cryptocurrency holders comes at a time when policy makers are seriously considering the merits of a central bank digital currency, or CBDC. The Bank of Russia is broadening its efforts to understand CBDCs in the wake of the COVID-19 pandemic, which has had a destabilizing effect on monetary policy.
