One of the biggest impacts awaiting to hit Bitcoin and the rest of the cryptocurrency space is the firm hand of regulation. It is already beginning, starting with Russia’s finance ministry seeking to put holders in prison for non-compliance when it comes to disclosing cryptocurrency valuation accruals.
Here’s what this new proposal says, and how this could start a butterfly effect across the globe where cryptocurrencies are made a target.
How Much Bitcoin Do You Hold? Not Telling The Russian Ministry Of Finance Is Punishable By Jail
Cryptocurrency investors, before buying their first Bitcoin or altcoin, are provided with a strict set of rules to follow from old-timers in the industry that have seen a thing or two in their time.
This advice includes never investing more than you’re comfortable losing in terms of capital, relying on two-factor authentication, and to never disclose how much crypto you hold. Unless the Russian government demands you to, that is.
According to new rules put forth by the Russian Ministry of Finance, Bitcoin holders specifically are being targeted if they hold more than a certain amount of the cryptocurrency, valued in Russian rubles.
Russian citizens with a wallet address and transaction history that shows a balance of 100,000 rubles or more, must disclose this balance to the government. This translates to roughly $1,300 USD and 0.12 BTC.
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Those that have a wallet or show transactions that lead to a balance that has accrued by 1,000,000 rubles or more, and don’t disclose this information, will face jail time. The accrual can be based on the asset’s value increasing, or by having received a sum of cryptocurrency valued at 1,000,000 rubles or more.
Failure to provide this information could result in up to three years of imprisonment.
The rules are part of a new law passed by Russian President Putin, that go into effect come January 2021. Starting in the following tax year, Russian citizens will need to report any Bitcoin holdings above these levels, or risk fallout with the law.
BTCUSD Estimated Price Necessary For Possible Jailtime | Source: TradingView
Why This Sets A Dangerous Precedent For Crypto Globally
Clearly, failure to disclose is a bad thing and could lead to legal trouble, or possible time in prison. But it also sets a dangerous precedent that could have a ripple effect all throughout the crypto industry globally.
All it takes is someone to cast the first stone, in this case, making it punishable by jail time to fail to disclose cryptocurrency holdings.
Related Reading | United States Regulators Begin Crack Down on Crypto and Bitcoin Crime
Recently, in the United States, the IRS began requiring uses to check a box to disclose if they owned or held what they call virtual currencies throughout the year. Those virtual currencies include Bitcoin and Ethereum, and other cryptocurrencies.
Failure to report taxes properly is already illegal in the United States, so in a sense, not disclosing this information is already punishable by the law there as well.
If the rest of the world follows suit, then any remaining layer of privacy Bitcoin offers from the government, will go out the window immediately.
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