The Russian Parliament is reviewing a bill to more strictly regulate crypto

Russia is toughening its tone against crypto market players operating outside any legal framework. Moscow has just submitted a bill to parliament that provides for heavy criminal penalties for any unauthorized cryptocurrency service. A regulatory offensive that is part of a broader strategy to take back control of a sector that currently escapes state control.

A bill with harsh penalties

This is a major turning point in Russian crypto policy. Last Friday, the Russian government submitted to the State Duma, the lower house of parliament, a bill aiming to introduce criminal sanctions against any entity offering cryptocurrency-related services without authorization from the Bank of Russia.

Specifically, the text targets actors “carrying out activities related to the organization of digital currency circulation” outside the regulatory framework. The penalties are severe:

• Up to 4 years in prison and a $4,000 fine for an individual.
• Up to 7 years imprisonment or 5 years of forced labor in case of an organized group or large-scale illicit income.

Penalties increase significantly when collective activity is involved. An organized group, or any operation generating large-scale income, exposes its members to forced labor or a sentence of up to seven years in prison. The bill also provides for fines of up to 1 million rubles, approximately 13,100 dollars.

This bill extends a legislative offensive initiated as early as last March, which then targeted cryptocurrency miners operating illegally. The new version significantly widens the scope: now all unregistered digital asset services are targeted by the authorities.

A notable reservation tempers the legislator’s momentum. The Russian Supreme Court considers the bill insufficiently justified to warrant criminal penalties and views the measure as premature. Its reasoning: wait first for the entry into force of the law on “digital currency and digital rights,” expected in July, before initiating any criminal prosecution.

Crypto regulation responding to a massive capital flight

This bill does not come out of nowhere. It fits in an alarming context for Russian authorities: according to government estimates, 129 billion dollars in cryptos escape state control every year. The daily transaction volume reaches 50 billion rubles, more than 10,000 billion over the year, all operating in a total gray zone.

Worse still, a large share of these flows benefits foreign or offshore platforms. Fees paid by Russian traders to these entities approach 15 billion dollars per year, whereas the Moscow Exchange itself generates only one billion in annual profits.

The regulatory logic is therefore twofold: take back control of uncontrollable flows, and repatriate wealth evaporating abroad. The Bank of Russia and the government are simultaneously working on a legal framework that would allow brokers and traditional exchanges to integrate crypto without additional licenses, a pragmatic approach to avoid strangling a market already well established in the habits of Russian citizens.

In short, Russia finds itself at a crossroads. Criminalizing without regulating risks increasing the flight to underground circuits. But doing nothing means leaving hundreds of billions of dollars out of tax reach. The real test will be the coherence between this bill and the comprehensive regulation expected this summer.