Russia To Penalize Bitcoin-To-Fiat Conversions

In a move to curb the use of bitcoin and other cryptocurrencies in the country, Russian Finance Minister has confirmed the plans to penalize the conversion of digital currencies into fiat currencies.

While several countries and major financial institutions world over are realizing the potential of bitcoin and the underlying blockchain technology and even considering regulating it, Russia seems to stand firm on its stance to ban digital currencies. Perhaps the risks associated with digital currencies and their possible use for money-laundering and terrorist activities might be the reason behind its decision.

Alexey Moiseev told CoinDesk that a proposed draft law has been created and, if passed, would mean people involved in crypto-to-fiat conversions would face up to four years in prison.

"It's true that we have developed draft law which provides up to four years in prison for some types of activities which relate to ... quasi-currencies. These types of activities are typically related to an exchange of those currencies into the Russian national currency – the ruble. This is the only type of activity which we propose to penalise with criminal sentences”, he said.

Moiseev added that under the proposed law, people would not be penalised for mining cryptocurrencies or converting one cryptocurrency to another.

CryptoCoinsNews reports that Assistant Minister of Economic Development Elena Lashkina told Izvestiya, a broadsheet newspaper in Russia: “Operations on them [Bitcoin] are speculative in nature, are carried out at so-called virtual exchanges and carry a high risk of changes in its value...The anonymous nature of the production of money substitutes, including cryptocurrency, [brings with it an] unlimited range of [threat] actors to create the conditions for the involvement of citizens and companies in illegal activity, including the laundering of proceeds from crime and terrorist financing."