All conversions between cryptocurrencies and the ruble should be regarded as illegal exchange transactions, the ministry believes.

Russian ministry of finance has proposed a draft law that imposes criminal responsibility, as well as non-judicial blocking of websites, for cryptocurrency emission and circulation. However, the primary concern of the regulator is exchange operations between cryptocurrencies and the national currency, the spokesperson for the ministry told CoinFox.

The government department proposes to equate these operations with illegal exchange transactions in fiat currencies. However, according to current Russian law, such violations are mostly subject to the Code of Administrative Offences, while only credit fraud with international currency is punishable under criminal law.

Contrary to this, the draft law criminalises emission, buying for future sell and selling of so called “surrogate money”. Violators may face substantial fines or compulsory community labour, but the penalty still does not imply incarceration. The document also prescribes a procedure for immediate blocking of websites that provide information about using “surrogate money” as a means of payment or exchange.

According to the ministry, cryptocurrencies are “surrogate money” by nature. They are not backed by legally bound entities and are associated with high risks. The anonymity of “surrogate money” emission may pave the way for individuals and companies to be involved in illegal activities including money laundering and terrorism financing. 

Last month the deputy finance minister of Russia Alexey Moiseev said that blockchain will play a significant role in the future of finance. At the same time, he expressed his concerns about potential usage of bitcoin for money laundering and financing terrorism.

In October a prominent Russian newspaper Izvestia wrote that Ministry of Finance delivered a new legislative proposal seeking to impose penalties of up to four years in jail on those who mine and use bitcoins. However, the rumours were later dismissed.

Nadya Krasnushkina