Russia drafts prison terms for unlicensed crypto

TLDR

Russia is moving toward criminal penalties for running unlicensed crypto services, but the proposal is still contested at the top legal level.

1. A draft bill in the State Duma would criminalize unlicensed crypto services, with fines up to about 1 million rubles and prison terms up to seven years for organized operations.
2. The bill centralizes control under the Bank of Russia and extends enforcement to the Investigative Committee and Federal Security Service, likely shrinking gray market exchanges and mining.
3. Russias Supreme Court has warned the move is premature, so the final rules and timing will depend on how this bill interacts with a broader Digital Currency law due to take effect in July.

Deep Dive

1. What The Draft Bill Actually Does

According to a recent summary, the State Duma received a draft law that would criminalize unlicensed crypto services, targeting any entity that facilitates digital currency circulation without Bank of Russia approval. The bill envisages fines up to roughly 4,000 dollars and up to four years in prison for individuals, with harsher penalties for organized groups, including up to seven years in prison or five years of compulsory labor and financial penalties up to 1 million rubles or a share of income over five years. This builds on an earlier March package that focused on illegal crypto mining and infrastructure, now expanded to cover all unlicensed digital asset service providers in Russia.

2. How It Could Reshape Crypto Activity

If passed in its current form, the bill would make most unregistered exchanges, brokers, OTC desks and possibly some P2P facilitators criminally risky inside Russia. Oversight would be concentrated in the Bank of Russia, with investigations involving the Investigative Committee and Federal Security Service, which signals a security and capital control lens rather than a pure consumer protection one. That likely means more pressure on local mining firms, fiat on or off ramps, and any Russian based intermediaries serving foreign platforms, and it could push users further toward fully offshore venues and informal peer to peer channels.

3. Timeline, Uncertainty And What To Watch

Russias Supreme Court has already criticized the proposal as premature, noting that a foundational Digital Currency law is only scheduled to come into force in July and warning that criminal penalties applied before that could create legal inconsistencies. Lawmakers have not publicly resolved these concerns, so the bill may be amended, delayed or enforced only after the wider framework is live. The key signals to watch are whether the Duma advances the bill without major changes, how the Digital Currency law defines legal use of crypto and central bank digital currency, and whether enforcement agencies begin test cases once both frameworks are in place.

Conclusion

Russia is clearly steering toward a tightly controlled, state licensed crypto environment that treats unapproved activity as a criminal matter, but the legal architecture is still in flux. For crypto users and businesses with Russian exposure, the main practical issue is rising compliance and enforcement risk around any local footprint, while uncertainty over the final shape of the rules encourages greater reliance on foreign or harder to police channels.