Russia Proposes Prison Time for Unlicensed Crypto Services
Russian lawmakers submitted legislation Friday that would make operating unlicensed cryptocurrency services a criminal offense punishable by up to seven years in prison, marking Moscow's most aggressive move yet to bring digital assets under state control.
The bill, introduced to the State Duma, targets any entity "carrying out activities related to the organization of digital currency circulation" without approval from the Bank of Russia. Individual operators face fines up to $4,000 and four years behind bars. Those running organized operations could see penalties jump to 1 million rubles ($13,100) and seven years imprisonment.
Supreme Court Pushes Back
The timing is already drawing criticism. Russia's Supreme Court called the criminal penalties "premature," noting they lack "reasoned justification" until the country's broader Digital Currency and Digital Rights law takes effect in July. That framework, expected to distinguish between qualified and retail investors while establishing licensed exchange requirements, would provide the regulatory foundation the court believes should precede criminal enforcement.
This bill follows a March legislative package that introduced criminal penalties specifically for illegal mining operations. The latest draft expands that scope considerably, covering any unregistered digital asset services.
Regulatory Timeline Tightening
Russia has been steadily building its crypto oversight apparatus. The country legalized cryptocurrency transactions in January 2021 while banning their use for domestic payments. Individuals exceeding 600,000 rubles ($7,757) in annual crypto transactions already face mandatory reporting to the Bank of Russia and Rosfinmonitoring.
In 2024, Moscow carved out an exception allowing digital currency for international trade—a direct response to Western sanctions limiting Russia's access to traditional financial channels. The comprehensive regulatory framework now taking shape aims for full implementation by mid-2026, with enforcement of trading penalties beginning in 2027.
Meanwhile, a $14 Million Hack
The legislative push comes as Russia-based exchange Grinex—already under international sanctions—halted trading Thursday after losing approximately 1 billion rubles ($13.7 million) in what it called an attack by "entities of hostile states." The company filed criminal complaints with Russian law enforcement.
The Grinex incident underscores the regulatory challenge Moscow faces: controlling an industry that operates across borders while its domestic players remain targets for international pressure and cyberattacks. Whether criminal penalties for unlicensed operators will strengthen or simply drive Russia's crypto market further underground remains an open question as the July regulatory deadline approaches.