Russia Targets Unregistered Cryptocurrency Miners with New Criminal Penalties

Russia Proposes Severe Penalties for Illegal Cryptocurrency Mining

The Russian Ministry of Justice has proposed a bill aimed at combating unregistered cryptocurrency mining activities in the country, following concerns raised by the Finance Minister regarding illegal mining operations. According to the new amendments proposed to the Penal Code, penalties could reach up to 1.5 million rubles (approximately $19,000) and up to two years of hard labor for illegal cryptocurrency mining. In cases where mining activities generate substantial profits, the maximum penalty could extend to five years in prison, 480 hours of hard labor, and a fine of up to 2.5 million rubles ($31,800).

The bill underscores the government’s recent efforts to control a portion of the revenues generated by an expanding mining industry. So far, only about 30% of cryptocurrency miners have registered and legalized their operations. "Our overall approach has been to bring this industry out of the shadows as much as possible," stated Ivan Chebeskov, Deputy Finance Minister. Additionally, miners consuming less than 6,000 kWh monthly are classified as individuals and can mine without registration, however, they are required to pay personal income tax.

By the end of October, Russia reportedly had 1,364 registered cryptocurrency miners, according to Finance Minister Anton Siluanov. In August 2024, President Vladimir Putin signed a set of laws that provide a regulatory framework for cryptocurrency mining, set to come into effect on November 1, 2024. These laws mandate mandatory registration and tax forms for all entities involved in mining, including infrastructure providers.