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The Russian Bitcoin Witch Hunt 18 Jul 2016, midnight

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The Russian Bitcoin Witch Hunt

Originally Posted 26 Mar 2016 by

Russian Government has strictly indicated that Ruble is going to be the only legal tender that will be used in Russia. In addition, Central Bank of Russia is only legal entity that issues the currency in Russia, regardless of whether the money comes in electronic form or in paper form. All monetary substitutes are classified illegal in the country, and Bitcoin will surely fall in to that category. However, if you have been to Russia, you would know that preferred currency in the country is Euro or US Dollar.

It is likely that Bitcoin and Russia would never get along. It is not wrong either. Most of the self-respecting countries in the world are keeping their options open regarding digital currency and Fintech, which isn’t on agenda for the Russian officials yet. However, what’s worrying is the draft of new legislation which makes the Bitcoin illegal in Russia and aims to punish the companies of digital currency even harder.

Enforcing Stricter Penalties for Using Bitcoin Although it’s up to the government officials of individual countries to mark Bitcoin illegal or legal in their countries, there are only few countries where Bitcoin is officially illegal. And Russia is soon going to be in that list, as the Ministry of Finance of Russia has proposed new draft which will officially make Bitcoin illegal. But this isn’t all that Russia’s Finance Ministry has planned to do, as new draft includes different proposals of imposing new penalties on the companies that deal with the digital currency. Fines between 3 and 5 million Ruble can be imposed on the companies that violate the new law.

Businessmen, especially the ones who are working in financial sectors like insurance, banking and others, dealing with the digital Currency in any form may face jail sentence of 7 years. In addition, they will also not be allowed to get particular jobs in financial world for next 3 years. The officials of the Russian government are very clear that the only legal currency in the country is Ruble. In addition, Central Bank of Russia is only legal entity that issues the currency in Russia, regardless of whether the money comes in electronic form or in paper form. All monetary substitutes are classified illegal in the country, and Bitcoin will surely fall in to that category.

It is still unknown if this draft is going to affect progress made by Qiwi team. Although, BitRuble developers are closely working with Central Bank of Russia, and other officials of the government, Qiwi will actually create new type of money in Russia, regardless of how it is controlled.

All monetary substitutions are associated with high risk in Russia because there isn’t any legal entity managing or overseeing valuta other than Ruble. There’s a huge concern regarding usage of the digital currency in terrorist funding and money laundering, although no such allegations have been proven in the past.

Furthermore, Russia strongly believes in sticking to coins and paper for the monetary transactions, instead of going towards electronic means. There are many countries today that are aiming to eliminate cash and go towards electronic means; it seems that Russia is taking more cautious approach.

Russia’s decision is in contrast to the approach of European Union towards Bitcoin. The European Union Officials have described digital currency as monetary “replacement.” EU has also admitted that Bitcoin has a lot of potential and the concept shouldn’t be ignored.

When one looks at how different countries are looking to issue the digital currency in near future, legislative proposals by the Russian officials can end up being simply proposals in the long run. Bitcoin might have an uncertain future in some regions, but keeping an open mind towards Bitcoin, its concept and the underpinning technology seems like the right decision.



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