Russia Bans Bitcoin Citing Higher Risk Involved from It

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Russia Bans Bitcoin Citing Higher Risk Involved from It
Russia Bans Bitcoin Citing Higher Risk Involved from It

Russia Bans Bitcoin Citing Higher Risk Involved from It

After issuing a warning last month, Russia’s Central Bank (CBR) along with other government agencies declared that Bitcoin is illegal. Earlier last month the CBR had warned people against using virtual currencies like Bitcoin, Litecoin, etc. as according to it they could be tied to gangs involved in money laundering and terrorist financing.

Then the CBR had also said that virtual currencies are illegal under Article 27 of the federal law ‘On the Central Bank of the Russian Federation’ and the use of Bitcoins and other cryptocurrencies carries the risk of violating citizens’ property rights and cannot be used in Russia. The views are being also shared by the country’s Prosecutor General’s Office.

The Prosecutor General’s Office after meeting with the Central Bank, FSB, and Interior Ministry came up with the decision and said that the monitoring of the use of virtual currencies shows an increasing interest in them, including for the purpose of money laundering, profit obtained through illegal means.

The government officer also said that Russia’s official currency is the ruble. The introduction of other types of currencies and the issue of money surrogates are banned.

There is far more clarity in its wording now when compared with similar other developments recently in India and China wherein it was discouraged and denounced as a legal tender.

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Huge Financial Risks Involved Says the Government Agency

From the language used it looks that cryptocurrencies like Bitcoin and Litecoin cannot be used by Russian citizens or corporations. The government agencies are also charting out plans on how to prevent the use of virtual currencies as according to them these are independent currencies which are not regulated by a government and therefore carry a high risk in devaluation.

In the issued statement the government says that another issue that Bitcoin and other digital currencies have been facing is that due to the anonymous nature, either knowingly or not may become involved, including unintentionally, in illegal activity such as the legalization (laundering) of criminal gains and financing terrorism.

Though there have not been illegal activities involving Bitcoin, the U.S. which saw several of them taking place is still friendly towards it. Earlier the U.S. saw that websites such as Silk Road, which was recently shut down by the .U.S, have been prospering on Bitcoin; the government yet did not ban Bitcoin. In fact, the U.S. Postal Service is considering the possibility of adding a Bitcoin exchange to its current roster of non-bank financial services.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com