Russia Proposes Criminal Penalties for Unlicensed Crypto Services

The Russian government is seeking to tighten its grip on the digital asset sector by introducing criminal liability for entities providing cryptocurrency services without official authorization. A new bill submitted to the State Duma proposes that any individual or organization facilitating the circulation of digital currencies without a license from the Bank of Russia could face severe legal consequences. Under the proposed legislation, unregistered operators could face fines of up to $4,000 and prison terms of up to four years. For those operating as part of an organized group or causing substantial financial damage, penalties could increase to seven years of imprisonment or five years of compulsory labor. Additionally, the bill suggests fines of up to 1 million rubles (approximately $13,100) or a percentage of the convicted person's income over five years. This proposal follows earlier legislative efforts in March targeting illegal mining. However, the Russian Supreme Court has already signaled caution, describing the bill as "premature" and lacking "reasoned justification" until the broader "Digital Currency and Digital Rights law" takes effect, which is expected in July. The move comes amid heightened security risks in the domestic landscape. For instance, the Russia-based exchange Grinex recently reported a loss of 1 billion rubles (roughly $13.7 million) due to a hack attributed to "entities of hostile states," highlighting the precarious environment for digital asset firms operating in the region.