Russia has proposed a new draft bill seeking to crack down on unregistered cryptocurrency miners in the country, following concerns from the finance minister about illegal mining activity.
Russia’s Ministry of Justice has proposed imposing penalties of up to 1.5 million rubles (around $19,000) and up to two years of forced labor for illegal cryptocurrency mining, according to new draft amendments to the Criminal Code, published on Monday.
For crypto mining activities involving outsized profits, the maximum sentence could reach up to five years in prison, 480 hours of forced labor, and a fine of up to 2.5 million rubles ($31,800).
Illegal cryptocurrency mining by an unregistered “organized group” that has realized outsize profits could lead to fines of up to 2.5 million rubles, or five years of either forced labor or imprisonment.
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Only 30% of miners registered
The new draft bill signals the government’s latest effort to capture part of the revenue from a growing crypto mining industry in the country. Miners are required to fill out a special monthly tax form on the amount of digital currency produced.
However, only about 30% of cryptocurrency miners have registered and legalized their mining operations as of June 19, Russia’s Deputy Minister of Finance, Ivan Chebeskov, told news outlet Tass at the time, adding:
“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 have not yet completed this process.”
Miners with a monthly consumption of under 6,000 kWh are considered physical persons and can mine without registration with the Federal Tax Register, but need to pay a personal income tax on the mined cryptocurrency, according to a decree published on Nov. 1, 2024.
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There were 1,364 registered cryptocurrency miners in Russia at the end of October, according to Russia’s minister of finance, Anton Siluanov, speaking at a plenary session of the State Duma.
In August 2024, Russian President Vladimir Putin signed a set of laws providing a regulatory framework for cryptocurrency mining, effective Nov. 1, 2024. The draft imposed compulsory registration and taxation forms for all entities engaging in mining, including infrastructure providers.
The law also prohibits foreign entities from mining in Russia and allows the government to restrict mining in certain regions, a matter that spurred criticism for not fully legalizing crypto mining in the country.
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