Legal or illegal? Bank of Russia officials undecided over Bitcoin status

Maria Nikolova

Department director at Russia’s c-bank says the regulator never actually pushed for banning crypto-currencies.

Confusion has been mounting over the status of Bitcoin and other crypto-currencies in Russia after a number of officials from the Central Bank of Russia and the nation’s government have made contradictory statements on the matter over the past few days.

A week ago, Deputy Finance Minister Alexey Moiseev said Russia is looking to recognize crypto-currencies as legal in 2018, but soon after that Maxim Grigoriev, Chief of the Centre for Financial Technologies at the Bank of Russia, noted that it was too early to talk of legalization of crypto-currencies in Russia.

The diversity of opinions has just grown, as another senior official at Russia’s central bank – Vadim Kalukhov, has added his voice to the chorus of opinions and, more importantly, has offered his interpretation of the official stance of the Bank of Russia regarding crypto-currencies.

A short reminder: back in 2014, Russia’s “Megaregulator” published a statement concerning the growing popularity of crypto-currencies like Bitcoin. The central bank referred to Article 27 of the law “On the Central Bank of the Russian Federation”, which prohibits the issue of money surrogates in the Russian Federation. Also, the Bank of Russia stated that the provision of crypto-currency exchange services by business entities will be considered as involvement in suspicious activities. These actions are treated as violations of the laws on anti-money laundering and terrorism funding, the bank said back then.

Mr Kalukhov, who is Director of the Financial Technology, Projects and Process Management Department at the Central Bank of Russia, has a particular view on the regulatory statement. He insists that the famous statement by the Bank of Russia was just a warning and that the regulator never pushed for banning crypto-currencies.

This is a very peculiar interpretation. For starters, the Bank of Russia referred to Bitcoin and other crypto-currencies as money surrogates. The law prohibits the issue and use of money surrogates in Russia. That is why, since 2014, the position of the Bank of Russia regarding crypto-currencies was considered to be absolutely negative.

This harsh opposition has indeed softened over the past year or so. The Ministry of Finance has put on hold its plans to introduce tough penalties for Bitcoin-related activities in Russia. In fact, the Ministry is expected to file a report on Bitcoin regulation with the government this summer. The document will treat crypto-currencies as financial instruments.

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