Deputy Finance Minister: Bitcoin Payments Won’t be Legalised in Russia

by | 29 September 2017

Bitcoin Payments

Russia’s deputy finance minister has said that pending legislation on digital currencies is likely to include a ban on bitcoin payments.

According to state-backed Russian news source TASS, Alexey Moiseev, the deputy finance minister of Russia, said:

“No regulator doubts that payments will be banned.”

Additionally, he implied that discussions on the regulation of the cryptocurrency are still continuing in the State Duma, Russia’s national legislature.

He said:

“The discussions will continue. I think that within the framework of these discussions we will decide what we will do with it.”

He remarked that he is in favour regulating digital currencies in Russia, stating:

“In any case, there is a market. It is developing rapidly, and there are certain advantages that could be used. I mean the advantages associated with attracting investments for projects through the ICO. I have a positive attitude to this, but there is another point of view. In order to make a decision, consensus will be necessary.”

The draft law on the regulation of digital currencies is expected by next month.

Anatoly Aksakov, head of the State Duma for the financial market committee, said:

“I think we will determine it within a month. I think in October, and then we will discuss it before submitting it.”

Previously, Anton Siluanov, Russia’s finance minister, said that the regulation bill would be ready within a year.

Russia’s Central Bank Doesn’t Class Bitcoin As a Currency

For months, the discussion of how to regulate bitcoin payments in Russia have continued. Yet, while debates remain, the Central Bank of Russia has questioned whether it should be classed as a currency.

In June, Elvira Nabiullina, governor of the central bank, said that she views bitcoin as an asset.

At the time, she said:

“We don’t consider that bitcoin can be considered as a virtual currency. It’s more digital assets with the regulation of assets.”

She added that the bank had concerns about the cryptocurrency.

“We have some doubts, we don’t see some huge benefits from introducing digital assets in our economy.”

Recognising Digital Currencies

Back in April, Moiseev stated that Russia may recognise cryptocurrencies in 2018. In a report from Bloomberg, the deputy finance minister said:

“The state needs to know who at every moment of time stands on both sides of the financial chain. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

At the time this news was quite significant from the country.

A year previously, Russia’s Finance Ministry was threatening prison time for anyone using digital currencies. A new amendment was placed under the Criminal Code. Management and executives of banks and financial service firms faced up to seven years. However, every day individuals faced prison sentences of up to four years.

It remains to be seen whether the country eventually recognises digital currencies in 2018. The market remains a popular one, which can be seen by its steadily rising value on a daily basis.

‘No Point in Banning Cryptocurrencies’

Interestingly, earlier in September, Siluanov was reported to be working on a law to regulate digital currencies by the end of 2017. As the Russian government has become more accepting of them, Siluanov stated that there was ‘no point‘ in banning them.

In a report, he said:

“The state understands indeed that cryptocurrencies are real. There is no sense in banning them, there is a need to regulate them.”

Aksakov is also reported as saying that a bill would be passed by the end of the year, adding:

“If we agree on the main approaches in the coming week, I think that by autumn, by the end of the fall session, we will be able to adopt this law in order to provide a legal space for the development of this market.”

However, given the country’s stance on the crypto market in the past, delays to when the bill will be ready are expected.

Bitcoin’s Value Grows

News that Russia won’t be legalising bitcoin payments comes at a time when the market is seeing an uptick in value.

At the time of publishing, on the 29th September, the digital currency is trading at $4,180, a 0.73 percent rise in 24 hours. In seven days its value has increased by 15.96 percent. Its market value is currently worth $69.3 billion.

For much of September, though, the digital currency has been hovering below $4,000. This was primarily to do with Chinese authorities prohibiting the operation of domestic digital currency exchanges.

Jamie Dimon’s Comments Get Shot Down

Yet, negative comments from various individuals may have also impacted its price. Namely, from Jamie Dimon, the CEO of JPMorgan Chase. According to him, bitcoin is ‘a fraud‘ that ‘won’t end well.’ In his opinion, the cryptocurrency will eventually blow up.

Earlier in September, Dimon said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

He also claimed that he would ‘fire in a second’ any employee found trading in bitcoin.

Understandably, his remarks ignited a backlash from industry leaders. The most notable, of which, was from a fellow bank CEO.

Recently, James Gorman, CEO of Morgan Stanley, said that:

“[Bitcoin is] certainly something more than just a fad.”

He added:

“The concept of anonymous currency is a very interesting concept – interesting for the privacy protections it gives people, interesting because what it says to the central banking system about controlling that.”

Even though Gorman says he hasn’t invested in the currency, he’s spoken to people who have, stating:

“It’s obviously highly speculative but it’s not something that’s inherently bad. It’s a natural consequence of the whole blockchain technology.”

These comments will no doubt be refreshing to hear. Not only that, but the fact that they were uttered by a bank CEO illustrates the impact that bitcoin and bitcoin payments are having. The fact that some bank CEOs can’t see this may indicate that they are ‘probably afraid‘ of the currency and the technology behind it.

While bitcoin payments are expected to be banned in Russia that’s certainly not the case everywhere else.

Featured image from Shutterstock.