Bitcoins are outlawed in Russia

10.02.2014

On the 6^th of February, 2014 a report on the results of meeting on the legitimacy of the use of anonymous payment systems and cryptocurrency was published on the website of the General Prosecutor’s Office. As it was mentioned in report, growth of interest in virtual currencies (cryptocurrency) is connected with an aim of legitimization (laundering) proceeds of crime. The meeting was attended by representatives of the Central Bank of the Russian Federation.

According to Article 27 of the Federal law “On the Central Bank of the Russian Federation (the Bank of Russia)” ruble is the official currency of the Russian Federation. The introduction of other currencies and monetary substitutes is prohibited. On that basis, anonymous payment systems and cryptocurrency (including bitcoins) are recognized as monetary substitutes, so they cannot be used by individuals and legal entities.

Nowadays owners of cryptocurrency are deprived of right to protect their rights in judicial and administrative order on the territory of the Russian Federation and other countries.

Based on: http://www.genproc.gov.ru/smi/news/genproc/news-86432/

Expert’s opinion

I observe constantly very interesting and funny situation. Those people, who are supposed to be professionals in some question, are not actually aware of basic terms and issues in this area. Reading some documents, which are prepared by experts in the monetary regulation, I come to the thought that nobody of these “experts” knows about “Jamaican monetary system”.

It is normal that lay people do not know about it. But specialists in the Central Bank of the Russian Federation should know that Jamaican monetary system is a modern international monetary system, based on the model of free conversion of currency which is characterized with consistent exchange rate fluctuations.

The “experts” should know that the gold standard and the gold parities were officially abolished (the binding rates to the gold for domestic and international operations were abolished). The “experts” should be aware of the fact that regime of freely floating exchange rates was established: their quote is formed in the currency market on the basis of supply and demand and so on.

What is the difference between rubles and bitcoins? The difference is that a number of bitcoins is fixed, but the Central Bank can print as many rubles as it desires. Generally, bitcoins are the same money, the rate of which is determined by supply and demand.

Sooner or later the “experts” will read “Economics” or at least “Wikipedia” before they make a decision about regulation of cryptocurrency. But not about its total and impossible prohibition. 

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)