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Future of Bitcoin in Russia
July 16, 2015 13:12

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The Kremlin has admitted bitcoins can be used for some transactions after cautious statements by the Central Bank.
It does not mean the authorities would push for cryptocurrency to be widely accepted but at least that would cool some hot heads in the parliament who sought an all-out ban.
Earlier, Russia-IC reported that a new bill drafted by the Finance Ministry aimed to prohibit the use of cryptocurrencies.
Cryptocurrencies, otherwise known as virtual or digital currencies, are a medium of exchange using cryptography to secure the transactions and to control the creation of new units. The first cryptocurrency to be created was Bitcoin in 2009.
Until recently, bitcoins and other digital currencies were considered to be perfectly legal but the legislation sponsored by the Finance Ministry is supposed to outlaw any alternative currencies defined as monetary surrogates.
The most interesting part of the new bill was the fines introduced to enforce the act – starting from 5,000 and going way up to 1 million roubles.
Had the bill been enacted, transactions with digital currencies would be considered a minor crime, with individuals facing between 5,000 and 50,000 roubles in fines, officials would be liable to pay out up to 100,000 roubles while enterprises would have to cough up between 500,000 and 1 million. Apparently, the large fine for enterprises to supposed to spook them from accepting bitcoins as a means of payment, something they’ve been eager to do to attract the millennials.
Mining and distribution of software allowing to mine bitcoins and other digital currencies would make you liable for a fine of up to 50,000 roubles while officials and companies would have to splurge up to 100,000 and 1 million roubles, respectively.
The move was expected to be regarded as another act to suppress Internet freedoms, despite the fact that many governments, including in developed nations, have been tightening regulation of this sector.
For instance, in October 2013 the US FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth $28.5 million at the time. In China, buying bitcoins with yuan is subject to restrictions, and bitcoin exchanges are not allowed to hold bank accounts.
Bitcoin has been labelled a speculative bubble by many including Former Federal Reserve Chairman Alan Greenspan and economist John Quiggin, says Wikipedia. Tawo lead software developers of bitcoin, Gavin Andresen and Mike Hearn, have warned that bubbles may occur. Nobel Laureate Robert Shiller was quoted as saying that bitcoin "exhibited many of the characteristics of a speculative bubble."
Earlier, the head of Russia’s biggest lender, Sberbank, warned against any attempts to stymie the use of bitcoins. Speaking at the investment forum in Davos, he said bitcoins are an exciting global experiment breaking the current paradigm. He told Bloomberg he had requested the Central Bank, the Finance Ministry and the president’s Executive Office to block the previous move to ban cryptocurrencies by Russian MPs.
Sberbank could issue a copycat of bitcoins in the future to keep up with the global trends, says German Gref, CEO of the country’s largest lender, says the online news outlet.

If the idea gets traction with consumers, the bank would consider issuing a new cryptic currency based on Yandex.Money. 
The service was acquired by Sberbank earlier this year from Yandex, who got $60 million for 74 percent of the service. 
Gref believes virtual currencies need regulation which will be introduced after a collapse of any of them. 

According to a survey by Google, Russians lead in the number of queries for bitcoins, followed by Estonia and the US. 


Author: Mikhail Vesely

Tags: Russian finance Russian economy    

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