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Russia’s Anti-Bitcoin Stance May Be Softening, Reports Say

(@pete_rizzo_) | Published on March 6, 2014 at 18:51 BST

The Bank of Russia has issued a formal response to a letter penned by a citizen requesting more detail on its alleged banning of digital currencies this past February, reports suggest.

The letter asserts that a meeting of top Russian financial authorities in February did not result in a bitcoin ban, but rather was devoted to “combating crimes in the sphere of the economy devoted to the use of anonymous payment systems and cryptocurrencies on the territory of Russia”.

The statement has appeared translated into English on Bitcoin In Russia, and in Russian on BTCRussia, and Habrahabr, among other sources.

Translations of the posted letter indicate that the goal of the meeting was also to “develop a unified approach to the determination of the legal status of cryptocurrencies”.

Furthermore, the letter indicated that meeting attendees “discussed future directions for the legal regulation of the sphere of cryptocurrencies”, including establishing property rights for citizens and organisations in the field and introducing regulation for their use.

A translation of the letter posted online reads:

“Thus the position of the meeting was not to prohibit all operations related to cryptocurrencies, the main goal was the preparation and realization of a complex of measures to prevent the use of cryptocurrencies in illegal operations, including those related to the legalization (laundering) of proceeds from crime, as well as improving the regulatory framework to protect the rights of citizens and organizations using cryptocurrencies.”

The statements were addressed to Valery Alexandrovich, who sent a letter to the bank following its February statements.

Changing tone

The document runs counter to past statements from Russia’s General Prosecutor's Office, which had previously indicated that the use of any monetary instruments other than the Russian ruble is expressly prohibited.

The February announcement stated:

“The anonymous payment systems and crypto-currencies, including bitcoin – which is the most popular of them – are monetary surrogates. As such, their use by private citizens or legal entities is not allowed.”

Those statements were said to have been approved at a meeting comprising representatives from the Bank of Russia (also called the Central Bank of the Russian Federation) and the Russian Interior Ministry, among others. However, in light of the new document, they may more accurately reflect written law in the way that California does not formally allow alternatives to the US dollar.

Representatives from major bitcoin exchange BTC-e, which broke ties with a RUR service provider following the announcement, suggest that Russia’s central bank “never banned” bitcoin, and that the statements were “just a warning”.

BTC-e indicates that the letter is consistent with how “procedures work in [Russia]”, suggesting that Russia’s evolution on the issue has been similar to most other nations.

It offered the following timeline as an explanation for how events are developing in the country:

1. [Central bank] makes warning, sometimes in very strict words due lack of understanding the issue.
2. After the warning, bunch of requests of clarifications from the users of that country goes to the authority.
3. Authority from some number of requests start do homework better and research the issue more carefully.
4. Authority adjust previously made warning with clarification what exactly allowed and what is not.

Regulatory impact

As Russia’s supposed ban had been seen as among the more aggressive actions taken against digital currencies, it may have exerted some influence on global regulators, though no countries have acted as a result of the February statements.

Neighbouring nations such as Estonia, Kazakhstan and Lithuania, for example, appear to be looking to the EU for direction.

The alleged ban seems to have had a slight impact in the US, however. Senator Joe Manchin, for example, cited Russia’s policy in a letter to top US regulators last week, along with the harsh measures adopted by China and Thailand.

However, given the initial reaction to Russian policy, a reversal of such a stance would likewise carry an equivalent influence in the global community.

Kremlin image via Shutterstock

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