The Russian Ministry of Justice said that people who mine cryptocurrency illegally should pay fines and go to jail. This is because officials say that most miners still haven’t signed up for taxes.
After the finance minister raised worries about unlawful mining activity, Russia has put out a new draft bill that aims to tighten down on unregistered cryptocurrency miners in the country.
Proposed criminal penalties for illegal mining
New draft changes to the Criminal Code that came out on Monday say that Russia’s Ministry of Justice wants to punish anyone who mine cryptocurrencies illegally with fines of up to 1.5 million rubles (about $19,000) and up to two years of forced labour.
If you make a lot of money from cryptomining, you might get up to five years in prison, 480 hours of forced labour, and a fine of up to 2.5 million rubles ($31,800).
An unregistered “organised group” that mines cryptocurrencies illegally and makes a lot of money might be fined up to 2.5 million rubles, compelled to work for five years, or sent to jail.
Source: regulation.gov.ru
Low registration rates among miners
The new draft bill is the government’s latest attempt to get a piece of the expanding crypto mining business in the country. Miners have to fill out a particular tax form every month that tells the government how much digital currency they made.
As of June 19, only about 30% of cryptocurrency miners had registered and made their mining operations legal, according to Ivan Chebeskov, Russia’s Deputy Minister of Finance, who spoke to the news outlet Tass at the time. He went on to say, “Our general approach when we introduced mining regulation into this industry was to bring this industry out of the shadows as much as possible.” We haven’t finished this process yet.
Existing mining thresholds and tax rules
According to a decree announced on November 1, 2024, miners who use less than 6,000 kWh per month are considered physical persons and can mine without registering with the Federal Tax Register. However, they must pay personal income tax on the cryptocurrency they mine.
Anton Siluanov, Russia’s minister of finance, told the State Duma at a plenary session that there were 1,364 registered cryptocurrency miners in Russia at the end of October.
In August 2024, Russian President Vladimir Putin signed a package of regulations that would outline rules for cryptocurrency mining. These laws would go into effect on November 1, 2024. The plan made it mandatory for all mining companies, including those that provide infrastructure, to fill out registration and tax forms.
The law also says that foreign companies can’t mine in Russia and lets the government limit mining in some areas. This has led to criticism for not fully legalising crypto mining in the country.