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

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.

Russia Considers Regulating Bitcoin, but Doesn’t Class it As A Currency

As Russia’s Central Bank explores the ways in which it can regulate the digital currency Bitcoin, the bank’s governor has raised questions as to whether it can be classed as a currency.

In a recent interview with CNBC, Elvira Nabiullina, governor of the Russian Central Bank, stated that she views Bitcoin as a digital asset instead of a currency.

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.”

However, the fact that the bank is even considering the regulation of Bitcoin is a marked difference from the country’s previous stance regarding the cryptocurrency.

In March 2016, a new amendment to the Criminal Code by the Ministry of Finance in Russia saw the regulator proposing a seven-year prison sentence for management and executives of banks and financial services firms for the use of Bitcoin. For everyday individuals caught using the digital currency, the proposed prison sentence was deemed less at four years.

However, despite the proposed new draft law, the following month saw the proposal by the Finance Ministry hit a delay. At the time, the deputy finance minister Alexei Moiseev stated that a number of corrections to the proposal were the cause of the holdup.

Now, though, in a turnaround of events, the central bank’s governor has revealed that the authority is ‘analyzing’ the possibility of regulating the digital currency and is looking at the internalisation of the digital currency into the country’s regulatory systems. While Nabiullina didn’t extend further on what the central bank was doing, she did add that the authority had some concerns about Bitcoin.

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

Yet, while the Russian Central Bank is weighing the pros and cons of Bitcoin as it works on the ways it can regulate it, there are some Russian companies that are due to embrace the currency as a form of payment.

Ulmart, which is the Russian version of Amazon, revealed in May that it was going to start accepting Bitcoin alongside the fiat ruble in September 2017. It was due to accept the digital currency earlier in February; however, the e-commerce giant experienced a setback after the central bank intervened, blocking the company from accepting Bitcoin.

In the PR, Brian Kean, Chief International Officer of Ulmart, said:

“Ulmart believes such initiatives as bitcoin can be part of the efforts to develop ‘smart’ economy and cities and will aim to play a major role in this process.”

Bitcoin’s Price Surge

The price of Bitcoin has grown exponentially during the first half of 2017. In May, the price of the currency jumped to a near $2,800 for the first time, after it recorded a price of $2,799.

However, while the price bubble finally burst at the end of May, pushing the currency’s value down to $2,300 and wiping around $4 billion of its market cap value, there is still a bullish attitude within the community. So much so, that several predictions have already come out indicating a positive future for the digital currency.

Last December, a Saxo Bank analyst predicted that the price of Bitcoin could reach $2,000 by 2017, which came true on the 21 May, 2017. That same analyst, Kay Van Petersen, has now predicted that the cryptocurrency could attain even greater heights and believes that in 10 years time, each Bitcoin could be worth around $100,000.

Not bad considering that Bitcoin was trading around $750 toward the end of 2016. Van Petersen, however, is not the only way to see a bright future for the digital currency.

Aurelien Menant, CEO of regulated digital currency exchange Gatecoin, has said:

“I would not be surprised to see the Bitcoin price doubling again to around $6,000 by the end of the year.”

While, Bobby Lee, CEO of BTCC, a major digital currency exchange has tweeted in the past, stating that the cryptocurrency could reach between $5,000-$11,000 by 2020 after the block halving reward.

Additionally, CNBC Daniel Masters, director of Global Advisors Bitcoin Investment Fund (GABI) has spoken out and said that the long-term investment in Bitcoin remains strong and that it has the potential to reach $4,000 within eight to 14 months.

These are just a few of the positive indications of where Bitcoin can go, which is seeing heightened interest in the currency around the world.

Japan Legalises Bitcoin

A boost in the price and value of Bitcoin can be attributed to the fact that in April the Japanese government made changes to its regulations, which now recognises Bitcoin as a form of payment. As a result, significant trading volumes are coming from Japan.

With Japanese companies now open to accepting the digital currency as a form of payment, companies such as Peach Aviation Ltd., will make it possible for customers to pay for their flights with the currency by the end of 2017. Peach, however, is just one of thousands of industries that are already, or are due to, accept the currency in light of the new law changes.

Russia’s Next Move?

It’s not yet clear as to where Russia is going with its proposed Bitcoin regulation. In a report from Bloomberg in April, Moiseev, said that in 2018 Russia could recognise digital currencies such as Bitcoin as the authorities work on enforcing rules against money laundering.

He 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.”

Even though Bitcoin isn’t regulated by any government, its use by criminals has meant that it is being scrutinised by many governments who believe it’s being used for money laundering purposes, which is hard for the authorities to track.

The recent WannaCry cyberattack, which targeted thousands of computers in hundreds of countries, further highlighted its use within the criminal world. Russia was one country targeted and is reported to have been the worst hit in what has become known as the most audacious global cyberattack to have taken place.

Naturally, it is because of this incidents that countries are keen to track Bitcoin payments to stem the flow of ill-gotten gains.

Such a move to regulate the currency in Russia may also play a role in pushing its price even higher.

As of 5 June, the price of Bitcoin is trading around $2,590.

Featured image from Flickr via Joseph Pole.