Russia’s seemingly never-ending quest to find consensus on crypto-specific legislation has taken a new turn – with the country’s finance ministry proposing a set of measures that could see failure to report crypto holdings made illegal, and punishable with potentially massive fines. (Updated at 10:48 UTC: updates in bold.)
Kommersant reported that under new draft legislation put forward by the ministry, undeclared crypto ownership could be punishable with fines.
The Ministry of Finance will meet with stakeholders and policymakers this week to discuss new versions of bills “to be adopted in connection with” Russia’s first-ever crypto law, which comes into force on January 1, 2021.
As reported, the first crypto law amounts to little more than a “glossary of terms” of all things crypto- and blockchain-related.
But the latest draft proposals, which Kommersant said it has seen copies of, appear to suggest imposing what sound like draconian measures for crypto holders who fail to let the state know what they are doing in the world of crypto.
The media outlet stated that the proposals would require all individuals who have received over USD 1,300 in a calendar year to inform the tax authorities. Crypto owners would be required to submit an annual report on their transaction history and the balances of their cryptoassets.
Failure to do so would result in a minimum fine of about USD 650 – or up to 30% of an individual’s total cryptoasset holdings.
The same media outlet quoted a tax lawyer at legal firm Bryan Cave Leighton Paisner (Russia) as stating that if the amendments are adopted, the first report would have to be submitted by April 30, 2021, for the current financial year (FY2020).
“The document was evidently written in a hurry, as it contains a lot of discrepancies – for example regarding criminal liability for legal entities. The liabilities themselves are extremely harsh, and cannot be considered fair at all,” Maria Stankevich, Head of Business Development at the EXMO exchange, told Our.
According to her, the ministry is just trying to test the waters and see how the community will react.
“All in all, this document was created by people who don’t know much about global best practice in crypto regulation. And these people certainly haven’t paid much attention to Financial Action Task Force (FATF) recommendations,” she added.
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