Update (12th September 22:30 BST): Deputy Head of Russia’s Ministry of Finance Alexei Moiseev has said Russia is likely to pass its digital currency ban in the spring of 2015, according to a report by Russian business news agency Prime.
“We might accept this law during this session, but most probably we will do it in spring,” Moiseev said.
On Friday (1st August), the Finance Ministry announced on the government’s regulation website that it was drafting a bill relating to cryptocurrencies, which, if approved, will likely see those who break the new laws end up in jail.
The announcement said:
“According to Article 27 of the Federal Law ‘On the Central Bank of the Russian Federation’ (Bank of Russia) the official Russian currency is ruble. The issuance of monetary surrogates in Russia is forbidden as well as the introduction of other monetary units. However, monetary surrogate has no standard definition in the Russian legislation.”
The Finance Ministry plans to make amendments to Article 27 of the Federal Law ‘On the Central Bank of the Russian Federation’, specifically banning the use of monetary surrogates, including cryptocurrencies. According to the ministry, the ban is necessary as monetary surrogates are widely used for buying illegal goods and money laundering.
Moreover, the government agency intends to restrict access to websites that enable people to buy, sell, transfer and use cryptocurrencies.
“Сryptocurrencies have no real value and their prices are determined due to speculations. So, there is a great risk that investors will lose their money,” the ministry’s statement concluded.
Burykina Natalia, chairman of the State Duma Committee on Financial Markets, believes there is no sense in imposing the criminal responsibility for using cryptocurrencies in Russia.
“[Even] if the Finance Ministry thinks that bitcoin can compete with the ruble, this threat isn’t severe for the moment. According to the Russian legislation, the ruble is the only legal payment instrument, something else can just be an exchange instrument. If someone wants to exchange [bitcoin], why should we interfere?” she said.
Bitcoin’s current status in Russia
The legality of bitcoin has been discussed frequently in Russia since the beginning of this year. The Bank of Russia was the first government agency in the country to warn citizens and businesses about the risks associated with digital currencies like bitcoin.
The central bank also mentioned that involvement in bitcoin transactions and exchange services would be considered as “potential involvement in the implementation of suspicious transactions” in accordance with existing legislation on money laundering, as well as counter terrorism legislation.
In February, Russia’s General Prosecutor’s Office also issued a statement on bitcoin, stating:
“The official Russian currency is the ruble. The use of any other monetary instruments or surrogates is forbidden.”
The issue was discussed in government in June, when the Ministry of Finance was ordered to draft a bill specifically outlawing the use of all monetary alternatives, including cryptocurrencies.
On a more positive note, the Wall Street Journal last month reported that the Bank of Russia said it would not seek to take harsh measures against cryptocurrency use.
Bank of Russia deputy chairman Georgy Luntovsky said: “At this stage, we need to watch how the situation develops with these kinds of currencies. These instruments should not be rejected.”
Discussion on the bill is open until the end of this month and, if approved, the amended act will come into force in 2015.