Bank of Russia slams crypto currencies, reiterates warning from 2014

Maria Nikolova

The Bank of Russia says it is too early to allow trading of crypto currencies on exchanges and their use in payment structures.

Over the past year or so, there have been numerous reports about Russia’s authorities, including the Bank of Russia, warming up to crypto currencies. That is why, today’s press release by the Bank of Russia slamming crypto currencies is rather startling.

In today’s announcement, Russia’s financial “megaregulator” reiterates its stance towards Bitcoin and its likes from January 2014. A swift reminder – back then, the Bank of Russia said the use of Bitcoin is like the use of money surrogates and may be treated as a violation of the AML laws.

The regulator notes the high risks associated with the use of crypto currencies and says it is premature to allow them along with any financial instruments linked to crypto currencies to the exchanges and regulated markets or the payment structures of the Russian Federation.

On the brighter side, the Bank of Russia confirms that it is monitoring the crypto currency markets and is exploring ways to regulate this segment.

In August, Elina Sidorenko, who is at the helm the working group on cryptocurrencies at the State Duma, the lower chamber of the Russian parliament, said the bill for regulating Bitcoin and its likes was facing a delay.

Ms Sidorenko explained that the bill, which was originally set to be ready in October, will be ready in the winter at the earliest. She mentioned several factors for the delay, such as the need to establish a common position for all institutions involved in the process, as well as the recent Bitcoin price fluctuations, which raise additional questions about the vulnerability of crypto currencies.

Ms Sidorenko said that at present there are discussions on whether cryptocurrencies need a new law altogether or an existing law (or laws) should be amended to cover Bitcoin and its likes. In case of the latter, there has to be consensus on which law(s) should be amended.

Another important discussion topic is the nature of crypto currencies. There is disagreement on whether they should be treated as means of payment, derivatives, digital assets, etc.

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