There is no legally responsible entity behind cryptocurrencies and, in the case of problems, there is no one to protect investors, Russia’s President Vladimir Putin warned.
Vladimir Putin, President of the Russian Federation, has added his voice to the chorus of warnings concerning the risks associated with cryptocurrencies.
During a meeting with government officials, Central Bank of Russia officials and business representatives on Tuesday, October 10th, the President voiced his concerns about the use of cryptocurrencies. He emphasized that there is a risk of using them for money laundering, tax avoidance and financing of terrorism. Mr Putin also stressed that there is no legally responsible entity behind cryptocurrencies, and this means that in case the “bubble bursts”, there will be no one to protect investors.
Nevertheless, he noted the importance of finding the right way to use novel technologies in the banking sphere.
Mr Putin’s comments broadly reflect the stance of the Central Bank of Russia, which has also been very critical with regard to cryptocurrencies. The regulator has issued a stark warning with regard to Bitcoin and its likes in September this year. Moreover, the central bank has criticized the cryptocurrency-related activities of the MFB Clearing Center, which had presented a new set of clearing rules on its website, including ones covering clearing of off-exchange electronic contracts for cryptocurrencies. The Bank of Russia demands that MFB removes the rules associated with these contracts and presents the redacted version to the regulator.
In addition, Sergey Shvetsov, First Deputy Governor of the Bank of Russia, has said that the central bank and the prosecutors are working together to close the foreign websites that offer Russian residents to buy cryptocurrencies.
Mr Shvetsov said that all derivative instruments related to cryptocurrencies are seen as negative phenomena by the “Megaregulator”. The central bank is not supporting these instruments and will implement measures to limit all operations with them for the regulated part of the Russian market. He reiterated that these instruments bring very high risks for the Russian citizens and businesses. Moreover, he noted, Bitcoin has become a means for getting artificially high returns for a very short period of time, something that is characteristic of financial pyramids.