Hard Times for Bitcoin in Russia

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In a time where more and more countries are becoming Bitcoin-friendly, others like Russia are the cryptocurrency’s biggest opponents. In late 2019, we wrote about an impending ban on Bitcoin and Altcoins in Russia and it seems that it is finally coming to fruition. As of mid-March 2020, Russia’s central bank is planning to ban the issuance and circulation of cryptocurrencies including Bitcoin.

The law regarding Bitcoin has always been confusing in Russia. It’s clear that the government is not sold on the idea of digital currencies. However, the law was pretty confusing and unclear, and the latest statement by the Russian central bank only makes things even more confusing.

Issuance of Bitcoin an “Unjustified Risk” in Russia

A bill called “On Digital Financial Assets” is nearing completion and once it’s voted in the Duma it will ban the issuance and circulation of cryptocurrencies. This was revealed by Alexey Guznov, head of the legal department in the central bank in a recent interview. According to Guznov, legalization of Bitcoin and cryptocurrencies is an unjustified risk. The Central Bank will explicitly prohibit emission and organization of cryptocurrencies and their circulation. Of course, legal viability is planned if anyone violates rules.

This is bad news for cryptocurrency owners in a massive market where Bitcoin could potentially flourish. In a time when countries such as France and Germany are starting to recognize the potential of Bitcoin, Russia is taking a step back. There might be, however, a silver lining. When asked directly if Russia’s highest financial institution will ban residents from converting cryptocurrency to Rubles, he did not give a direct answer. In fact, he said that the bank wouldn’t be able to regulate such a transaction made from a jurisdiction that doesn’t prohibit it.

Russia’s proposed ban on cryptocurrencies was drafted in early 2018. There have been several delays in regulation and the whole thing has stretched on for years. President Vladimir Putin himself ordered the adoption of the aforementioned bill twice, yet the legislation is still unfinished.

While the central bank isn’t sold on the idea of Bitcoin, it has dabbled with the idea of creating a local digital currency. The institution has been exploring ideas for some time, so this proposed ban on Bitcoin may be just paving the way for a digital Ruble.

Hard Times for Russian Bitcoin Fans

Even with the recent negative news about Bitcoin’s price caused by the coronavirus outbreak, early 2020 brought positive tides for Bitcoin. Germany and France have legalized the cryptocurrency to some extent and other countries are expected to do the same. Such legalization could prove massive for Bitcoin and many crypto industries such as Bitcoin gambling.

A growing industry that could support a solid part of a country’s economy on its own, Bitcoin casinos will no never flourish in Russia. The country’s ban on gambling complicates things further, so it’s fair to say that Russia is one of the biggest opponents of the leading cryptocurrency in the world.

It’s a big shame, though, as it could bring a lot to the country’s budget.

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March 18, 2020: • No Comments

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