Russia’s relationship with cryptocurrencies has been a murky one. The government has swung between legalization and instituting a total ban on the assets for years, although nothing has materialized just yet.
The latest in the swing appears to be towards an outright ban. Earlier today, news source RT reported that members of the State Duma (the Russian lower house of parliament) were considering passing strict regulations against the assets.
Crypto Will be Entirely Illegal
Citing people familiar with the matter, the news medium explained that success with the bill would mean that cryptocurrencies are now illegal in Russian. Essentially, any form of crypto use – whether it’s as minute as buying Bitcoin or as comprehensive as owning an exchange – will be deemed illegal. The report adds that the draft bill before the State Duma suggests that offenders could be fined anywhere from 500,000 rubles ($7,000) to two million rubles (about $28,200).
Anyone who gets caught after having violated the law and made substantial sums of money over time could also see some jail time. The jail term could run up to five years with forced labor, or just imprisonment worth seven years.
Of course, this isn’t the first time that the government will be looking into possible action against cryptocurrencies. Last November, local news source RBC reported that several government agencies had outlined a plan to seize cryptocurrencies linked with illegal activities. As the report explained, the government was looking to develop a legal means of seizing digital assets. To help, it had reportedly called on agencies such as the Ministry of Internal Affairs, the Prosecutor General’s Office, the Justice Ministry, and more.
RBC claimed that the Supreme Court will also help in the endeavor, and that a framework would be ready by December 31. However, nothing materialized, and people can still make crypto transactions.
Later that same month, BeinCrypto Russia reported that the government was working to ban digital payments with cryptocurrencies across the country. Like the previous order, this one didn’t yield any results as well.
Blocking a Possible Capital Outflow
The rationale for this new ban is unclear, although it could be an economic one. Like several oil-dependent countries, Russia got significantly affected when the West Texas Intermedia (WTI) oil benchmark slipped into negative numbers last month. It would appear that many people have rushed to crypto as a means to protect themselves.
Last month, data by cybersecurity firm Qrator Labs confirmed that cryptocurrency exchange traffic across Russia had surged by over 5 percent. If interest continues to rise this way, and with the country’s main asset – oil – still facing a tough time, more people will be looking to move their assets elsewhere. Bitcoin has always proven to always aid people in struggling economies, with countries like Venezuela, Lebanon, and Argentina as some notable examples. It would appear that the Russian government is trying to prevent such an outcome on its shores.