The Russian Justice Ministry is proposing fines of up to $19,000 and two years of forced labor for illegal cryptocurrency mining, given that only 30% of Miners are legally registered.
The Russian government is tightening its grip on the country's cryptocurrency mining industry through a new criminal code draft aimed at severely punishing unregistered Miners . According to amendments to the Criminal Code published on Monday, the Russian Ministry of Justice proposes fines of up to 1.5 million rubles, or approximately $19,000, and up to two years of forced labor for illegal cryptocurrency mining.
The penalties will be significantly increased for more serious cases. Large-scale, abnormally profitable mining operations can result in a maximum sentence of five years imprisonment, 480 hours of forced labor, and a fine of up to 2.5 million rubles. In particular, if the illegal mining is carried out by an organized group and generates large-scale, abnormally profitable operations, the penalty could be up to 2.5 million rubles or five years of forced labor or imprisonment.
Low registration rate despite regulations.
This draft law reflects the Russian government's efforts to collect a portion of the revenue from the country's booming cryptocurrency mining industry. Under current regulations, Miners must fill out a special monthly tax form detailing the amount of cryptocurrency generated. However, as of June 19, only about 30% of cryptocurrency Miners had registered and legalized their mining operations, according to Deputy Finance Minister Ivan Chebeskov, speaking to Tass news agency.
According to a decree effective November 1, 2024, Miners with monthly electricity consumption below 6,000 kWh are XEM individuals and can mine without registering with the Federal Tax Register, but are still required to pay personal income tax on the amount of crypto assets mined. Finance Minister Anton Siluanov revealed at a plenary session of the State Duma that by the end of October only 1,364 Miners had registered in Russia.
In August 2024, President Vladimir Putin signed a law establishing the legal framework for cryptocurrency mining, which came into effect in November of the same year. This law imposes mandatory registration requirements and tax forms on all entities involved in mining, including infrastructure providers.
However, the law also prohibits foreign entities from mining in Russia and allows the government to restrict mining activities in certain areas, which has drawn criticism for not fully legalizing cryptocurrency mining in the country.
