Russia Plans Tougher Penalties as Illegal Cryptocurrency Mining Persists Amid Low Registration

Russia is moving to impose tougher penalties on illegal cryptocurrency mining after officials reported low compliance with new registration rules. A draft bill from the Justice Ministry proposes fines, forced labor, and prison terms for miners operating outside the law. Officials say the measures are intended to bring a rapidly expanding sector under state oversight and into the tax system.

Only 30% of Miners Registered as Russia Expands Crypto Mining Enforcement

Draft amendments to the Criminal Code published by the Ministry of Justice on Monday focus on unregistered crypto mining. Under the proposal, individuals found mining illegally could face fines of up to 1.5 million rubles (about $19,000) and forced labor for up to two years. Officials say illegal activity has continued despite the introduction of mining regulations last year.

More severe penalties would apply in cases involving large profits. Mining operations that exceed income thresholds could result in prison sentences of up to 5 years, forced labor of up to 480 hours, and fines of up to 2.5 million rubles. Organized groups involved in illegal mining would face similar punishment, with courts allowed to choose between prison terms and forced labor.

Government figures show that miner registration remains low months after the rules took effect. Deputy Finance Minister Ivan Chebeskov said in June that only about 30% of miners had registered with tax authorities. Chebeskov added that the regulation is intended to bring mining out of the shadow economy and secure tax revenue from cryptocurrency production.

Russia Outlines Enforcement Measures for Illegal Cryptocurrency Mining

Key provisions of the proposed enforcement measures and existing rules include:

• Fines of up to 1.5 million rubles for unregistered mining.
• Prison sentences of up to five years for mining linked to large profits.
• Higher penalties for organized groups running illegal operations.
• Mandatory monthly tax reporting on mined cryptocurrency.
• Registration requirements based on electricity consumption.

Miners using less than 6,000 kilowatt-hours of electricity per month fall into a separate category. These individuals may operate without registering as businesses, although personal income tax still applies to any cryptocurrency mined. This exemption has been in effect since November 1, 2024.

Despite the regulations, Finance Minister Anton Siluanov said that only 1,364 miners were registered nationwide by the end of October. Lawmakers consider the number low, given the size of the industry and Russia’s position as a major mining hub, supported by relatively cheap energy in some regions.

President Vladimir Putin signed the mining legislation in August 2024, with full enforcement beginning in November. The laws prohibit foreign entities from mining in Russia and allow regional authorities to restrict energy use. Critics argue the measures fall short of full legalization, while officials say tighter oversight is needed to curb illegal activity and protect the power grid.