Russia advances prison terms for unlicensed crypto

TLDR

Russia is moving to criminalize unlicensed crypto services with potential multi?year prison terms, sharply tightening its already restrictive stance.

1. A new draft law would punish running unregistered crypto services with up to seven years in prison in severe cases, but it is not yet in force.
2. The bill fits a broader Russian strategy that centralizes crypto under the central bank, limits retail access, and tightens capital controls compared with the US and EU.
3. Crypto users and businesses should watch how the State Duma amends or passes the bill, and how it is enforced against exchanges, miners, and OTC desks serving Russian residents.

Deep Dive

1. What The Bill Actually Does

The Russian government has submitted a bill to the State Duma that introduces criminal liability for offering crypto services without registration or a license from the Bank of Russia, targeting anyone who organizes digital currency circulation without approval. Penalties start with fines and up to four years in prison for individuals, rising to up to seven years in prison or five years of forced labor and fines up to 1 million rubles for organized groups or large?scale violations, according to reporting on the proposed law that would criminalize unregistered crypto services.

The scope goes beyond exchanges to cover activities such as brokerage, custody, and other intermediary roles, effectively forcing any professional crypto business that touches Russian residents into the central banks licensing perimeter. Russias Supreme Court has criticized the proposal as premature and argued criminal sanctions should wait until a broader Digital Currency and Digital Rights framework, expected around July, is in place.

2. Russias Direction On Crypto

This bill builds on years of increasingly tight controls. After a 2020 law on Digital Financial Assets, Russia has moved toward restricting legal crypto trading to tightly defined channels and highly qualified investors, while banning or limiting many domestic crypto settlements.

Parallel measures include mandatory KYC on domestic platforms, proposed bans on anonymous tokens, and reporting requirements for Russians using foreign crypto accounts, all aimed at de?anonymizing flows and curbing capital flight. Compared with the EUs MiCA or typical US practice, which rely mainly on administrative and civil penalties, Russias choice to add criminal jail terms places it among the most punitive major jurisdictions, closer to the logic seen in China or Hungarys criminalization of unauthorized exchange services.

3. Who Is Affected And What To Watch

If passed largely as written, the clearest impact would be on Russian?facing exchanges, custodians, OTC desks, and possibly organized mining or brokerage operations that operate without Bank of Russia licenses. Some foreign platforms that still actively serve Russian clients may be forced to seek local authorization, exit the market, or shift users to less visible channels.

For ordinary Russian users, the legal risk is more indirect: the bill focuses on service providers, but it will reduce the number of compliant venues and push more activity either onto officially licensed channels or into P2P and DeFi, which carry their own operational and legal risks. Key milestones to watch are the Duma readings and amendments, the July digital currency law, and any clarifications on how organization of circulation is interpreted in practice.

Conclusion

Russias move toward prison terms for unlicensed crypto providers is part of a coherent strategy to centralize control, tighten capital oversight, and channel activity into state?approved rails rather than an isolated crackdown. The final text and enforcement pattern will determine how much business shifts into licensed Russian venues versus offshore and on?chain alternatives, but the direction of travel is clearly toward more legal risk for unregulated intermediaries and less tolerance for informal crypto infrastructure serving Russian users.