Russia Considering Blanket Ban on Using Crypto as Mode of Payment
A report by Russian media outlet Izvestia indicates that Russia is doing the necessary background work to issue a blanket ban on the use of cryptos for purchase of goods and services.
The new report cites unanimous sources familiar with the ongoing discussions at the Russia’s central bank, Ministry of finance and financial watchdog, which are all in favor of a nationwide ban.
Currently, cryptos are used for e-commerce and numerous Russian programmers, freelancers, copywriters and designers receive the payment for their work in Bitcoin (BTC) or Ether (ETH), an analyst at Alpari Information and Analytical Center, told Izvestia.
Antonov pointed out that cryptos are often used to purchase goods and services, even though it is not legally allowed. Some of the items purchased using cryptos including computers, tickets and household appliances. Even house rent or hotel booking is done using Bitcoin and other altcoins.
If Izvestia’s report is right, then it seems Russian regulators are concerned about cryptocurrencies being used as payment to aid crime and believe that a prohibition on the use of cryptos for settlement is necessary.
The news report also highlights the recent statement made by Alexey Yakovlev, deputy head of the banking regulation department of the Ministry of Finance, questioning the need for using cryptocurrencies as a mode of payment. Yakovlev said “We do not see any basis for cryptocurrencies to be used as a means of payment.”
The central bank has not officially issued any statement about drafting a bill to prohibit the use of crypto, but stressed that private cryptos cannot be compared with fiat money. Furthermore, the central bank has pointed out that cryptos cannot be deemed as legal tender for use in purchase of goods.
“If a decision is made to ban cryptocurrencies as a means of payment at the level of legislation, we consider it appropriate to support this position.”
The report further states that the Russian crypto community is gearing up to face restrictions on crypto, with rumors of likely jail term of between 5 and 8 years.
Considering the issues to be faced in enforcing a ban on cryptos, some industry experts believe that the prohibition will be constrained to a chain of “demonstration cases” aimed at discouraging public from breaching the law.
Antonina Levashenko, head of the Russia-OECD Center for RANEPA, has cautioned that the bill could encourage the formation of a black market, defying regulators’ tracking. Russia is also believe to be creating laws, anticipated to become effective by 2021, permitting government to confiscate crypto assets.