The Central Bank of Russia Aims to Protect Citizenry from Bitcoin

The Central Bank of Russian Federation has issued an official statement on the matters of the so-called “virtual currencies”, including Bitcoin as the most well-known and widespread type of cryptocoins at present time.

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The Central Bank of Russia Aims to Protect Citizenry from Bitcoin

The Central Bank of Russian Federation has issued an official statement on the matters of the so-called “virtual currencies”, including Bitcoin as the most well-known and widespread type of cryptocoins at present time. The financial institution aims to protect the citizenry of the country from possible violations that might occur in case individuals or legal entities get engaged in the online activities, like purchase, selling and exchange.  

The information provided by the press service of the Central Bank shows the determination to protect users from losing of funds due to instability and missing regulation of the field:

“Virtual currencies” lack provision and legally obliged subjects. The operations with them have a speculative character, are performed on the so-called “virtual exchange services” and carry a high risk of loss of value.”

According to the citation the institution is not willing to support the digital currencies and to perform the role of the necessary legally obliged subject issuing legislative acts and regulating out controversial situations.

The published document also prohibits exchanging the virtual coins, for example Bitcoin, to other types of currencies (fiat and recognized units), as well as goods, services and completed work. Bitcoin cannot be considered as a fair payment for employees and is not tolerated as a matter of exchange on the network. The statement says:

“The Bank of Russia warns citizens and legal entities, first of all, credit institutions and non-credit financial organizations, form usage of “virtual currencies” as an exchange matter for goods (work, services) or bankroll in rubles or foreign currency.”

The “virtual currencies” are also named “money surrogates” by the central Bank after the Federal Law of the country. The performance of any kind of activities both by private and legal entities is considered as crime, even if it completed involuntarily, without being conscious of the repercussions. The full text can be observed in the previous publication of the CoinTelegraph.

The in 2008 developed cryptocurrency Bitcoin was offered to the society by Satoshi Nakamoto. His personality is still kept secret, but some rumors propose that the name covers a group of activists – authors of the invention. The rising interest that was followed or even initiated by the increase of the price of the coin, optimization of mining software and new merchants appearing every day, accepting the coin, have made the Bitcoin a topic of interest for the most authorities. Several European countries, among them Germany, Belgium, Netherlands and Poland, tolerate the presence of the currency on the market and issue minor warnings without serious prohibitions. The people’s republic of China was among the pioneers, who succeeded to ban the coin indirectly. While the operations with the funds in virtual money are not prohibited, legal entities cannot provide users with deposit and withdrawal of funds via personal bank or similar accounts. The Russian federation was among the first countries to issue a very clear statement that leaves no trace of doubt.

However, the deed is surprising, as only a month ago German Gref voiced his interest in cryptographic currencies, determined them as future instrument of finance and economy, even was willing to set up a virtual coin on the basics of Yandex-Money. It is an unexpected move from the chair of the Central Bank.

On the contrary, Anatoli Knyazev, from the company Exante, which operates a hedge-fund of Bitcoins, is not sure that the sense of the statement is univocal:  

“Currently, it is not clear from the statement of the Bank of Russia whether the use of Bitcoin is generally prohibited.”

He also believes that this particular issue and similar from foreign countries could destabilize the coin network. There are no laws or rules that might bring real accusations to users. Many warnings, especially the one of China, have had a negative impact on the price, but the amount of users has not been affected.

The CEO of ICBIT (exchange service) Aleksey Bragin supports the opinion of Mr. Knyazev. He adds that the Bitcoin has to be considered as a successful alternative instrument, not as a form of money. Also he points out that the laws and rules miss out the definition of money surrogates. Even in case Bitcoin is considered as a form of surrogate than he has to be officially recognized by the government. At the same time, extracted or mined coins have no link to a geographic point; they cannot be associated with Russia or any other jurisdiction. These complications prevent the official institutions from any other activities, except for issuing of similar warnings.

The CoinTelegraph is going to follow the situation, but while we are working on the matter, please, feel free to voice Your opinions in the comments of this article.

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