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The Ministry of Finance of the Russian Federation proposed amendments to the Administrative Code with penalties for illegal trafficking of CFA and cryptocurrencies

The Ministry of Finance of the Russian Federation proposed amendments to the Administrative Code with penalties for illegal trafficking of CFA and cryptocurrencies

The Ministry of Finance has proposed a draft amendment to the Administrative Code of the Russian Federation with administrative responsibility for illegal trafficking in CFA and digital currencies, including the organization of trade and payment acceptance.

On February 8, the draft federal law “On Amendments to the Code of Administrative Offences of the Russian Federation”was sent to the Presidential Administration for consideration. The bill was submitted to the Government by the Ministry of Finance and is currently at the stage of collecting feedback from ministries and departments.

According to the proposed amendment to the Administrative Code, administrative liability for illegal trafficking, violation of the rules of transactions and illegal acceptance of digital currency will be provided. It is illegal to issue and circulate CFA and digital currencies by organizations and individuals that are not registered in the special register of the Bank of Russia. The amendments propose the following penalties:

For illegal issuance of digital financial assets and/or for violating the rules of transactions with them: 50 000 – 500 000 rubles for citizens, 100,000-1 million rubles for officials, 200,000-2 million rubles for legal entities;
Accepting payments in digital currency for goods and services: 20 000 – 200 000 rubles for citizens, 50 000 – 400 000 rubles for officials, 100,000-1 million rubles for legal entities. In addition, the confiscation of the subject of an administrative offense may be carried out.

The participants of the consultations noted that the adoption of the amendments may serve as a reason for the departure of cryptocurrency companies to the shadow sector of the economy and will become “a deterrent to the development of the CFA market.”

According to the Ministry of Economic Development and other participants of public consultations, the proposed amount of fines is ” unreasonably high, taking into account the degree of public danger and potential consequences.” In addition, the proposed bill does not provide for a transition period for the introduction of regulation. If the draft law is adopted, the Ministry of Economic Development proposes to postpone its entry into force for at least one year.

According to the comments, lawmakers should specify the situation of illegal acceptance of payments in cryptocurrencies for goods and services. This is necessary to avoid administrative liability in cases where the payment occurred without the knowledge of the legal entity or was mistakenly recorded in the information system.

At the moment, consultations are continuing on the proposed amendments and further changes in the draft law are possible. After the amendments are approved, the bill will be submitted to the State Duma, and then it will have to pass through the Federation Council and receive the signature of the president.

Recall that in July last year, Russian President Vladimir Putin signed
the law “On Digital Financial Assets (CFA) and Digital Currency”. The law came into force on January 1, 2021. This law does not provide for specific penalties for its violation, as a result of which it was necessary to amend the codes.