Russian MIA chief slams crypto currencies

Maria Nikolova

In the face of the overall enthusiasm surrounding Bitcoin and its likes these days, Russia’s Minister of Internal Affairs has blasted crypto currencies as means of financing terrorist activities.

The fortunes of crypto currencies these days have been controversial – the business has been embracing Bitcoin and its likes, as well as the technologies related to the crypto world, whereas regulators and police have been going increasingly concerned over crypto currencies and initial coin offerings.

Russia provides us with a bright example of how business enthusiasm and regulatory restraint concerning crypto currencies try to co-exist. Various companies, including the leading national air carrier – Aeroflot-Rossiyskiye Avialinii PAO (MCX:AFLT), have welcomed Bitcoin and its likes. Aeroflot has published a procurement notice for proposals for the implementation of crypto-currencies and related technologies in its operations. The Bank of Russia, however, has recently issued a stark notice regarding crypto currencies.

The tone of the central bank warning was echoed on Wednesday by Russia’s Minister of Internal Affairs, General of the Police of the Russian Federation Vladimir Kolokoltsev. Mr Kolokoltsev, who was speaking at the plenary session to the participants of the 37th ASEANAPOL conference, said it was urgent to prevent the use of innovative resources for criminal purposes.

“Crypto-currencies and modern electronic payment systems are used to conceal and legalize criminal proceeds, as well as to finance terrorist activities” – Mr Kolokoltsev said.

Early in 2014, the Bank of Russia said that crypto currencies may be treated as money surrogates and, thus, their use is an offense. The “Megaregulator” noted back then that the use of crypto currencies may be equivalent to a violation of AML rules. In its most recent notice on crypto currencies, the Bank of Russia reiterated its stance from 2014.

The Bank of Russia said it was exploring ways to regulate the cryptocurrencies segment.

In August, Elina Sidorenko, who is at the helm of a working group on crypto currencies 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, initially poised to be ready in October, would be ready in the winter at the earliest. She mentioned several factors for the delay, including the need to establish a common position for all institutions involved in the process, as well as the recent Bitcoin price fluctuations, which raise more questions about the vulnerability of crypto currencies.

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