The Bank of Russia has voiced its support for a ban on cryptocurrency payments, saying that “private cryptocurrencies cannot be equated with fiat money and cannot be legal tender.”
The banking authorities stated that if a ban on cryptocurrencies as a means of payment is announced, they will support the position. Like other regulatory authorities speculating on cryptocurrency, Russia continues to believe that cryptocurrencies carry significant risks, including in the field of laundering of proceeds from crime and financing of terrorism, as well as in conducting exchange transactions due to sharp exchange rate fluctuations.
On November 29th, the Central Bank of Russia stated that the Ruble should be the nation’s only legal tender. While nothing has been set in stone as of yet, the Central Bank is open to banning the ability to buy goods and services with Bitcoin due to the risky nature of cryptocurrencies.
After examining the Central Bank of Russia’s statements on the use of Bitcoin for payments, it is clear that the scenario is similar to what we’re witnessing in India. The Indian Central Bank issued statements against accepting cryptocurrencies as legal tender. While there were talks of a blanket ban, nothing is official yet. The legislative decision is pending and it may be years before officials act on it.
Russia’s Bitcoin community may see a similar situation unravel in the near future. Bitcoin and its use may be stuck in legal limbo for months, if not years, but it’s also important to not that there is no regulatory clarity on ICOs, mining or buying/selling cryptocurrencies at this time.
Speaking of a complete ban, countries like China have already explored the idea of a ban on Bitcoin but it’s noted that Beijing never issued a complete ban. Will Russia follow in the footsteps of China? Despite being against the use of cryptocurrencies as payments, the Bank of Russia has expressed interest in stablecoins and they have been developing the digital Ruble. While it appears as if Russia is a crypto-hostile country on the outside, they surprise the world by adopting stablecoins.
Russia’s move is in direct contradiction of the recent adoption of cryptocurrency in Germany. Germany has now approved new legislation to allow banks to sell and store Bitcoin and other cryptocurrencies.
This decision of Russian authorities is also influenced by the fact that Bitcoin suffered a drastic price crash in November with high volatility linked criminal activity. Nearly a year ago, in January 2018, the Ministry of Finance had allowed the sale and purchase of cryptocurrencies in the Russian Federation and it was announced that the final decision has not yet been determined.
With recent updates on their plans, it is clear that Bitcoin may be treated as an asset and despite fear of a blanket ban, the crypto community should objectively treat the statements and updates as developments and not the final word. There is speculation that Bitcoin can never truly be banned but for now, Bitcoin will not be accepted as a formal method of payment in the Russian Federation.
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