What Does the Proposed Crypto Law Change?
Russia’s government has submitted a draft bill to the State Duma that would introduce criminal liability for offering crypto-related services without regulatory approval. The proposal targets entities involved in what lawmakers describe as the “organization of digital currency circulation” if they operate without a license from the country’s central bank. The measure marks a shift from administrative oversight toward criminal enforcement, expanding the legal risks for individuals and firms operating outside the formal regulatory framework. If passed, it would give authorities broader powers to prosecute unregistered crypto activity. Under the proposal, individuals operating without registration with the Bank of Russia could face fines of up to $4,000 and prison sentences of up to four years. The penalties escalate in cases involving organized groups or large-scale financial impact.How Severe Are the Penalties?
The draft law outlines stricter consequences for coordinated or large-scale violations. “The same act committed by an organized group, or involving the infliction of damage or the extraction of income on a particularly large scale, would be punishable by compulsory labor for up to five years or imprisonment for up to seven years,” the bill’s text said. In addition to custodial sentences, lawmakers proposed financial penalties that could reach 1 million rubles, or the equivalent of up to five years of the convicted individual’s income. The structure signals an attempt to deter both small-scale operators and larger, organized entities from bypassing licensing requirements. The bill builds on earlier proposals introduced in March that focused on illegal crypto mining. The latest version expands the scope to cover the full range of unregistered digital asset services, including trading and transaction facilitation.Investor Takeaway
Russia is moving toward criminal enforcement rather than administrative penalties for unlicensed crypto activity. This raises operational risk for exchanges and service providers, especially those without formal approval from the central bank.
Why Is the Supreme Court Pushing Back?
Russia’s Supreme Court has questioned the timing and justification of the proposal. According to local media outlet RBC, the court said the bill lacks “reasoned justification” for introducing criminal penalties at this stage. The court described the measure as “premature,” noting that Russia has yet to fully implement its broader legal framework governing digital assets. The “Digital Currency and Digital Rights” law, expected to come into effect in July, is intended to define the legal status of crypto and establish baseline regulatory standards. This tension highlights a sequencing issue in Russia’s regulatory approach, where enforcement mechanisms are being advanced ahead of a fully defined legal structure for the underlying market.Investor Takeaway
Regulatory enforcement without a finalized legal framework increases uncertainty. Market participants face unclear compliance requirements alongside stricter penalties, complicating entry and operations in Russia’s crypto sector.
