Russia bans Bitcoin, says it’s used for money laundering

bitcoins-webrazziRussian Federation joins the bunch of countries who impose a full ban on the use of digital currency Bitcoin in financial transactions. The Prosecutor General’s Office of Russia declared Bitcoin as ‘a cryptocurrency that risks citizens’ property rights’ and banned its use by citizens and legal entities of any kind. PGO took the decision upon its thorough consultations with Russian Central Bank, FSB (Russian Intelligence Agency) and the Interior Ministry.

Main concern behind the ban is virtual currency’s high potential to be used for the purpose of money laundering and consolidating profit obtained through illegal means, Russia Today (RT) quoted from Itar-Tass. The statement said the official currency of Russia is ruble whereas Bitcoin is a money surrogate which is banned in Russia.

The full ban came a month after Russian Central Bank’s warning against using virtual currencies. It said the unregulated currency could well be a medium of exchange and financing for terrorist groups.

Bitcoin has just started gaining popularity in the country. Only a tiny portion of global turnover which is estimated to be around 10 million in USD, is transacted in Russia, according to Russia Beyond Headlines.

Last December, China banned banks from trading Bitcoin. People’s Bank of China declared Bitcoins ‘a virtual good’ and had no legal status. Central banks of Denmark and India have previously warned virtual currency’s users of legal risks. On the other hand, there are countries where Bitcoin is welcome as a medium of exchange, with an emphasis on the need for regulating it.

In the US, for example, a federal judge has ruled that ‘Bitcoin is a currency’ and should be regulated just like euros or dollars, according to TechCrunch. In line with this, the FBI recently raided websites like Silk Road who they think exploits Bitcoin holders ‘illegaly’ and confiscated around $28.5 million.

To some extent, it is true that cryptocurrencies like Bitcoin can be used in really dirty business. However, it is also a fact that the flow and trade of it is hard to halt via coercive measures because of its ‘invisible’ and highly liquid nature. Therefore, international financial institutions and major players in banking may just have to accept it as another currency instead of fighting it, and, therefore, seek to turn it into a controllable (or ‘profitable’) investment tool.

Last week, Superintendent of Financial Services in the State of New York, USA announced plans to introduce regulations that will guide virtual currency firms that operate in the state, possibly requiring them to hold a ‘BitLicense’, Russia Today wrote.

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