Russia Tightens Control: Fines for Illegal Cryptocurrency Mining

Overview of Proposed Amendments

The Ministry of Digital Development, Communications and Mass Media of the Russian Federation (Ministry of Digital Development) has prepared a draft of amendments to the Code of Administrative Offenses (CAO) that provides for fines for violations in cryptocurrency mining, Forbes reports. The document is at the approval stage and may be subject to changes.

The draft identifies three types of offenses related to mining:

• illegal mining;
• failure to report mined cryptocurrency;
• unauthorized activities of mining infrastructure operators.

Requirements for Legal Mining

According to current legislation, individual entrepreneurs and legal entities can engage in mining only after being included in the miner registry. Owners of mining equipment are also required to register. In addition, miners must provide Rosfinmonitoring with information about mined cryptocurrency, including address identifiers (virtual wallets) where it is stored. These measures are aimed at increasing transparency and preventing illegal activities in the cryptocurrency sector.

Penalties for Violations

The amendments provide for uniform fines for these offenses:

• for individuals — from 100,000 to 200,000 rubles with confiscation of cryptocurrency;
• for officials and sole proprietors — from 200,000 to 400,000 rubles with confiscation;
• for legal entities — from 1 million to 2 million rubles with confiscation.

The document also establishes fines for the use of cryptocurrencies for settlements in Russia outside of special legal regimes. For individuals and sole proprietors, the fines are the same as above, while for legal entities they range from 700,000 to 1 million rubles.

Cryptocurrency in the Russian Economy

Russian residents are not allowed to use cryptocurrency for payments of goods and services within the country. However, in 2024, the Bank of Russia launched an experimental legal regime that allows the use of cryptocurrency for settlements in foreign economic activities. This step reflects the authorities' desire to integrate digital assets into the economy under strict control.

Implications for the Crypto Industry

The introduction of fines signals the state's intention to strengthen the regulation of the cryptocurrency sector. The measures are aimed at combating unregistered mining, concealing data about mined cryptocurrency, and unauthorized activities of infrastructure operators. This might help reduce the risks associated with money laundering and tax evasion but also creates additional barriers for market participants.