What Future Awaits Bitcoin in Russia

Bitcoin, this new type of digital currency has spread all over the world and is gaining more and more popularity by day. The idea of such money is quite tempting and it is quite clear why. There is no control over such money, it is neither cash nor it belongs to any country. There is no government that can place regulations over it.

It is quite complicated to control something that uses software to solve mathematical problems and produces some form of currency that you cannot touch or influence by any methods known before.

This, actually, seems to be a problem. Decentralized as bitcoin is, it is a very controversial issue in Russia. Earlier this spring the Ministry of Finance passed a new amendment to the Criminal Code, in accordance to which the use of bitcoin can be punished with up to 7 years of imprisonment, while its adoption can be fraught with 4 years in jail. Pretty stringent measures, aren’t they?

This amendment is based on the idea that bitcoin is money substitutes and represent some kind of threat to the economy of the country. The amendment dates to March 2016 and covers the following points:

  • Individual users of bitcoin are either charged with the penalty of about $7000 USD (that is to be repaid at once or in the course of the several following years), or they will face the imprisonment with the term of 4 years.
  • Organizations’ representatives are to repay twice as much - $14,000 USD or spend 6 years in jail.
  • Yet, financial executive representatives are to get the worst. Individuals employed on finance-related positions are to face a penalty of 1-2.5 million rubles, or 7 years in jail.

This amendment looks far more rigid and harsh if compared with the previous one. Such measures are mostly explained by the concern that uncontrolled currency can be used for the benefit as well as the profit of any illegal activities.

Since March, however, the policy with regards to bitcoin has become more lenient. So, what do we have for now? Russian authorities go on refusing the acceptance of bitcoin as legal currency, let alone the idea of making it a state cryptocurrency. There is no indication that any cryptocurrency (not just bitcoin) is going to acquire a position of a state one at Russian financial market.

Even though the Central Bank of Russia welcomes the use of bitcoin on the territory of the country; it is just in one quality – as a payment instrument. There is no option for it to become a separate currency. At least, for now. The statement, surely, argues with the main objective of bitcoin creation – as a separate independent currency with no ties to the state or control on its part.

The position of bitcoin might be arguable; however, it is not unique. Germany has chosen a similar approach; however, not without a number of problematic issues that are inevitable to arise on the way. Among them there are the following: to determine the regulatory body as well as address the mechanism of deanonymization.

And these are the major problems to be solved by Russia if it chooses the aforementioned way. All in all, this course looks far brighter than the one that was agreed upon last spring and it is a definitely positive signal for all financial market players.