Russia's Ministry of Finance changes stance on bitcoin

Russia’s Ministry of Finance changes stance on bitcoin

In a U-turn move, Russia’s Deputy Finance Minister says crypto-currencies may be recognized as legal in 2018.

The position of the Russian authorities regarding bitcoin and other crypto-currencies remains controversial. Only a year after proposing tough penalties for those involved in Bitcoin-related activities, Russia’s Ministry of Finance appears to have changed its mind.

Russia may recognize bitcoin and other cryptocurrencies in 2018 as authorities look to enforce rules against illegal transfers, Deputy Finance Minister Alexey Moiseev told Bloomberg in an interview.

Mr Moiseev added that “The state needs to know who at every moment of time stands on both sides of the financial chain”. How such a requirement will combine with the anonymity, which is one of the bitcoin advantages, is unclear.

The statement marks a sharp twist in the position of Russia’s Ministry of Finance, which in March 2016, unveiled a set of proposals for law amendments, which envisage a maximum penalty of seven years of imprisonment for Bitcoin-related activities. This penalty is set to apply to senior managers of banks and financial services providers engaged in activities such as Bitcoin mining, buying/selling, “issuing”. The list of proposed penalties includes a ban from taking certain roles in the financial services sector, along with fines of up to RUB 2.5 million.

In January 2017, however, Mr Moiseev said that Russia’s Central Bank and the Federal Financial Monitoring Service did not see any threats from the use of crypto-currencies. The implementation of the “anti-Bitcoin law” is now on hold.

In March this year, Russia’s Prime Minister Dmitry Medvedev has joined the group of supporters of blockchain technology. He instructed the Ministry of Telecom and Mass Communications and the Ministry of Economic Development to study the applications of blockchain technology during the preparation of the “Digital Economy” program.

In February 2016, the Bank of Russia, which officially opposes the use of Bitcoin, showed the first signs of relaxing its stance with regards to new technologies associated with virtual currencies and announced the establishment of a group that would analyse the innovations and promising technologies in the financial market. Amid the priority questions for the group are the new developments in the mobile and payment areas, as well as the study of distributed ledger technologies (like blockchain).

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