RegionsBalticsIs Russia warming to bitcoin?

Is Russia warming to bitcoin?

The country’s long-standing antipathy to cryptocurrencies appears to be dissolving, with hints that it could recognise bitcoin as early as next year.

The Russian government is mulling the possibility of recognising bitcoin as a legitimate financial instrument as early as 2018, relaxing its traditional antipathy towards digital currencies.

The changed attitude was confirmed in an interview with Russia’s deputy finance minister, Alexey Moiseev, who said that the Central Bank of the Russian Federation, aka Bank of Russia, is developing a joint position together with the government on digital currencies as they seek to enforce rules against money laundering.

Moiseev reportedly indicated that the government wants access to information about transaction parties and that services in Russia handling digital currency payments would be required to collect and submit that data.

“The state needs to know who at every moment of time stands on both sides of the financial chain,” he said. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

Moiseev’s latest comments contrast with his remarks in 2014, when he suggested that Russia could introduce a ban on cryptocurrencies because of their use to fund illegal activities such as money laundering, purchasing illicit goods, rendering illegal services or funding terrorism.

The following year, the government proposed heavy fines for those involved in the creation or use of digital currencies and subsequently toughened them further in an amended draft. Officials maintained that their use in cross-border transactions, transaction anonymity and lack of a supervisory body makes them the perfect vehicle for illegal activities.

Shift in attitude

In 2016 discussion shifted to the possibility of a national cryptocurrency, which was reviewed by the Ministry of Finance and the Bank of Russia. Reports suggest that by last August the approach was being softened and Moiseev indicated at the time that Russia might even recognise bitcoin as a type of foreign currency.

In February this year, Bank of Russia deputy governor Olga Skorobogatova said that the authorities would decide whether digital currencies could be considered as asset, cash or security by mid-2017. It is now looking more likely that tracking cryptocurrencies could be adopted as a tool by the central bank in its efforts to prevent money laundering.

Some foreign banks have become involved in this battle. In January this year Deutsche Bank was fined US$629m by authorities in the US and the UK for compliance failures that saw the bank inadvertently assist wealthy Russians transfer around US$10bn abroad.

Last month, Royal Bank of Scotland (RBS) received information requests from the UK relating to an alleged money laundering ring that moved money through Moldova and Latvia between 2010 and 2014.

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