Bank of Russia to ban on the issuance and circulation of Bitcoin and cryptocurrency

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Bank of Russia to ban on the issuance and circulation of Bitcoin and cryptocurrency

The issuance and circulation of cryptocurrency in Russia carry an unjustified risk. According to a legal executive at the Central Bank of Russia, in t

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The issuance and circulation of cryptocurrency in Russia carry an unjustified risk. According to a legal executive at the Central Bank of Russia, in the bill on digital financial assets (CFA). The bill provides for a ban on the issuance and circulation of Bitcoin and cryptocurrency in Russia, introduces liability for violation of the ban.

Head of the legal department of the Central Bank, Alexei Guznov, noted in this connection:

‘’The position of the Bank of Russia remains unchanged. We believe that there are great risks in legalizing the circulation of cryptocurrency.’’

Risks arise for financial stability and the system of combating money laundering, consumer protection will also suffer, reports “Interfax”.

The Central Bank objected to legitimizing cryptocurrency as a “tool” and an object of circulation, said Guznov.

Some experts suggested treating cryptocurrency as foreign currency and regulating its output and circulation, in the same way, that is, applying the rules of the legislation on currency regulation and currency control to cryptocurrency.

The authorities replied that they did not intend to ban the ownership of the digital currency. The bill only prohibits the issuance and circulation of cryptocurrency and introduces liability for violation of this ban.

The Central Bank opposed institutions that would establish the release of cryptocurrency and facilitate its circulation.

But if a person who owns conditionally bitcoins completes his transaction in a jurisdiction that does not prohibit this, we are unlikely to be able to limit it to this,”

– Guznov.

However, in Russia, there is no such possibility. ‘The problem here is that the law that has developed until recently is primarily a national right. What we are facing is extraterritorial regulation of relations,’’ Guznov explained and added that the presence of cryptocurrencies is also largely extraterritorial.

Bank of Russia’s administration has been reliably suspicious about cryptocurrencies for the recent years. In October 2017, the regulator’s administrator, Elvira Nabiullina, said cryptocurrencies, ought not to be lawful in Russia. The last autumn, she likewise said Russia needn’t bother with its own national digital currency.

Bank of Russia revealed in December it was running the first pilot “tokenization project” by mining and purifying organization Nornickel, which is planning to tokenize bunches of palladium, cobalt, and copper and sell metal-upheld stablecoins.

The organization is currently trying its commercial center for the tokens, enrolled in Switzerland. Stablecoins like these, Guznov stated, are inside the system of the digital resources bill.

It is important that legal regulation in Russia does not impede the development of new technologies. ‘There are certain chances to reach the text that will allow the bill to be adopted,’ Guznov concluded.

Experts believe that the initiative to ban the production of cryptocurrencies in the Russian Federation can significantly harm the development of blockchain technologies and the economy as a whole.

The ban on cryptocurrencies is a step that can significantly push the country’s economy back. The fact is that cryptocurrencies are just one not the most important manifestation of the capabilities of blockchain technology. If there is a legislative ban on the issuance and circulation of cryptocurrencies, the whole technology will suffer’

– Yuri Brisov, member of the Commission for the Legal Support of the Digital Economy of Moscow branch of the Russian Bar Association.

When the bill is adopted, the representative of the department did not respond. But, as Anatoly Aksakov, head of the Duma committee on the financial market, previously reported, the law on digital financial assets in the very near future. 

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