Although the relationship between Russia and Bitcoin has always been uneasy, the cryptocurrency was never officially banned in the country. A new statement by the Bank of Russia now reveals that Bitcoin will, in fact, remain legal in Russia and that no further action to prohibit its use.
Although the currency is still not seen as legal tender in Russia, the statement brings ease-of-mind to Bitcoiners in the region who were previously unsure of Bitcoin’s future within the country.
Bitcoin mining still remains illegal in Russia, as the only currency that can be issued within the country is the Ruble. Users are, however, free to buy, sell, and transfer the digital currency with no restrictions applied.
The news comes at a time where Bitcoin has been shaken up by the measures applied by the People’s Bank of China which has recently issued two announcements regarding Bitcoin. The latest of which stated the plan to inspect domestic Bitcoin exchanges.
Taking a less intrusive route, the Bank of China will instead try to attain a better knowledge of Bitcoin and build a regulatory framework around it. Olga Skorobogatov, Bank of Russia Deputy Chairman stated:
“It became clear that it is not straightforward to address Bitcoin with existing financial regulation. Regulators and financial agencies agree to not prohibit the use of Bitcoin. Instead, we want to gain a better understanding of Bitcoin, and build a regulatory framework we have gathered the necessary knowledge.”
Although the cryptocurrency could be banned by law, enforcing such ban would be unfeasible given the decentralized and pseudonymous nature of Bitcoin. The Bank of China seems to understand that such a ban would only remove Bitcoin from law-abiding citizens. Therefore building regulations around the currency is the best course of action to ensure the safety of its users.
Although the recent statement by the Bank of Russia is a positive note for Bitcoin, the country’s outlook on Bitcoin wasn’t always so. A former statement by the Russian Ministry of Finance considered Bitcoin as a major threat to Russia’s economy and national security.
At the time, Russian Finance Ministry developed amendments to the Criminal Code, instituting a fine of up to 500,000 rubles and even a two-year corrective labor sentence for anyone mining Bitcoin on Russian soil. Finance Minister, Alexey Moiseev explained:
“Use will be restricted and the issue of foreign currency will be prohibited in Russia, but it can be bought, put in your pocket and taken abroad”
Nonetheless, the new direction taken by the Bank of Russia regarding Bitcoin may build a foundation for the widespread use of the digital currency within the country, which so far had a less-than-favorable relation with Bitcoin.