Russia is set to impose tougher sanctions on illegal cryptocurrency mining after authorities reported low compliance with new registration rules. A Justice Department bill proposes fines, forced labor and prison sentences for minors operating outside the law. Officials say the measures aim to subject a growing sector to state oversight and integrate it into the tax system.
In brief
- Russia is proposing fines, forced labor and prison sentences to curb illegal crypto mining and push operators into the tax system.
- Only about 30% of crypto miners have signed up so far, sparking concerns over lost tax revenue and uncontrolled energy use.
- Mining linked to big profits or organized groups could result in fines of up to 2.5 million rubles and prison sentences.
- The new rules require monthly tax reports, restrict foreign miners and allow regional limits to protect energy supplies.
Only 30% of registered miners as Russia ramps up crypto mining enforcement
Draft amendments to the Penal Code published on Monday by the Ministry of Justice target unregistered crypto mining. Under the proposal, individuals caught illegally mining could face fines of up to 1.5 million rubles (about $19,000) and forced labor for up to two years. Authorities say this illegal activity continues despite the introduction of mining regulations last year.
Tougher penalties would apply in cases involving large profits. Mining operations that exceed certain revenue thresholds could lead to 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 facing similar sentencesthe courts being able to choose between prison and forced labor.
Official figures show that minor registration remains low several months after the rules took effect. Deputy Finance Minister Ivan Chebeskov said in June that only about 30% of minors had registered with the tax authorities. Chebeskov added that this regulation aims to take mining out of the parallel economy and secure tax revenues from the production of cryptocurrencies.
Russia details enforcement measures for illegal cryptocurrency mining
Key provisions of the proposed enforcement actions 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 big profits.
- Tougher penalties for organized groups carrying out illegal operations.
- A mandatory monthly tax declaration on mined cryptocurrencies.
- Registration requirements based on electricity consumption.
Miners consuming less than 6,000 kilowatt hours of electricity per month fall into a separate category. These individuals can operate without registering as businesses, although personal income tax still applies to mined cryptocurrencies. This exemption has been in effect since November 1, 2024.
Despite the regulations, Finance Minister Anton Siluanov said only 1,364 miners were registered nationwide as of the end of October. Lawmakers consider the number low, given the size of the industry and Russia's role as a major mining hub, supported by relatively cheap energy in some regions.
President Vladimir Putin signed the mining law in August 2024, with full implementation beginning in November. The laws prohibit foreign entities from mining in Russia and allow regional authorities to restrict energy use. Critics say the measures fall short of full legalization, while officials say tighter control is needed to curb illegal activity and protect the power grid.
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