Russia advances criminal penalties for unlicensed virtual asset services... adding to the issue of exchanges being hacked.

The Russian government has submitted a bill to the lower house of Parliament aimed at holding criminally liable those operating “cryptocurrency services” without approval from the central bank. This move signifies a substantial increase in penalties for unregistered digital asset operators and is interpreted as an effort to strengthen control over the virtual asset market.

According to Coin Telegraph on the 13th local time, Russian lawmakers have submitted a draft to the State Duma concerning criminal responsibility for institutions engaged in activities related to the circulation of digital currencies without permission from the Russian Central Bank. Individuals conducting unregistered operations may face fines of up to $4,000 and imprisonment for up to 4 years; if deemed part of organized crime, penalties will be more severe.

The bill states that if the activity involves an “organized group” or results in large-scale losses or gains, the offender could be sentenced to up to 5 years of forced labor or up to 7 years in prison. It also includes fines of up to 1 million rubles (approximately 13.1 million Korean won) or penalties equivalent to up to 5 years of wages and other income.

This bill is a follow-up measure after the illegal mining penalty law first proposed in March this year. However, this time, the scope has been expanded beyond illegal mining to include all unregistered digital asset services, with more detailed sanctions. This is seen as a signal of Russia’s intention to exert stronger control over the virtual asset industry.

According to Russian media RBC, the Supreme Court pointed out that the bill lacks a “sufficient basis” to support criminal penalties. It also stated that, given the upcoming enactment of Russia’s “Law on Digital Currencies and Digital Rights” in July, introducing penalties at this stage is premature.

Meanwhile, Russia’s domestic virtual asset exchange Grinex recently suspended trading after suffering a hacker attack exceeding 10 billion rubles, with estimated losses of about $13.7 million. The company hinted that the attack might have been carried out by a “hostile foreign entity,” and has handed over relevant information to investigative authorities and filed criminal charges.

As Russia’s tough regulatory stance coincides with the hacking incident at the exchange, the local virtual asset industry is expected to face greater uncertainty in the short term. The debate over whether to prioritize regulatory system improvement or expand criminal penalties is likely to continue.

Summary by TokenPost.ai 🔎 Market Analysis Russia’s plan to introduce criminal penalties for unlicensed virtual asset services signals a move to bring the industry firmly under regulatory jurisdiction. By surpassing simple oversight and assigning “criminal risk,” the entry barriers for market participants are expected to rise significantly. 💡 Strategic Highlights In the short term, Russia’s domestic virtual asset operating environment may sharply contract. Investors and companies should focus on regulatory risks, licensing status, and security levels, especially as incidents like exchange hacks could serve as justifications for tighter regulation. 📘 Terminology Explanation Unlicensed Service: Refers to virtual asset-related activities operated without approval from regulators such as the central bank. Criminal Penalty: Legal sanctions beyond fines, including imprisonment and forced labor. Digital Currency Law: The foundational legislation defining the legal status and scope of use of virtual assets in Russia.

💡 Frequently Asked Questions (FAQ)

Q. What impact will this bill have on the market? Introducing criminal penalties for unlicensed operators will likely lead small and overseas-based virtual asset services to exit or shrink. The market may reorganize around institutions that obtain central bank approval. Q. Why is the exchange hacking incident related to regulatory tightening? Large-scale hacking incidents highlight the need for investor protection and serve as a pretext for the government to strengthen regulation. It especially emphasizes the necessity of managing exchanges with weak security. Q. What are the reasons the Supreme Court opposes this? The Supreme Court believes that introducing criminal penalties lacks a legal basis and considers it premature to strengthen sanctions before the relevant digital asset legal framework is fully established.

TP AI Note This article summary was generated using the TokenPost.ai language model. There may be omissions of main content or discrepancies with actual facts.