Although Russia recently issued the first major cryptocurrency law, the country's central bank continues to see the industry as a criminal region.
Sergey Shvitsov, First Secretary of the Bank of Russia, expressed the bank's negative attitude towards investing in digital currencies. Compare cryptocurrencies with pyramid schemes and roulette games. The official made his comments about the crypto industry during a live YouTube feed on July 28 regarding a new Russian bill on individual investor categories.
During a live session, Shvetsov confirmed that the Bank of Russia does not recognize cryptocurrencies as investments. He said:
“The Bank of Russia, as regulator, maintains that cryptocurrencies are not investments. It looks more like a pyramid scheme or roulette and does not apply to the financial market. The government or financial intermediaries should not encourage citizens to get cryptocurrencies.”
“We do not support investment in this criminal sector.”
Comparing cryptocurrencies with “monetary substitutions”, Shvetsov argued that no central bank in the world supports such economic alternatives. “They are banned by the Russian constitution and are subject to criminal guilt,” Shvetsov said.
The CEO went on to say that cryptocurrencies such as Bitcoin (BTC) are often used in illegal activities such as money laundering and therefore should not be supported by a bank. Officials say:
“Cryptocurrency is also used to circumvent anti-money laundering regulations. Therefore, we certainly do not support the investments of citizens in this criminal sector. ”
The main organization is still on its way
The latest comments from the Bank of Russia will come shortly after Russian lawmakers passed the important coding proposal “On Digital Assets”, or DFA, on July 22. However, the DFA bill does not provide for the actual regulation of the industry. The regulations will be part of the next draft law “On digital currency”.
The use of encryption as a method of payment is prohibited, the DFA account does not provide much information about investments in cryptocurrency. Meanwhile, the Bank of Russia is the most important regulatory body mentioned in the invoice document, and it gives the bank authority to decide which types of investors are qualified to invest in a particular product.
Global central banks are fighting against crypto
Like other central banks around the world, the Russian central bank is desperately facing the codification of cryptocurrencies such as bitcoins.
In March 2020, the bank argued that the DFA bill would ban the issuance and trading of digital currencies in Russia. In the end, it turned out that the bill was less hostile to the industry. In February 2020, the bank issued a set of rules for suspicious transactions, and classified any crypto transactions as a potential money laundering risk.
Russia's central bank is not alone in its negative stance on digital currencies. A number of banks around the world, including the Indian RBI, are trying to ban cryptocurrencies such as bitcoin to discourage new assets from decentralization. However, even the Indian central bank eventually reversed the decision when the Supreme Court overturned the RBI ban in March 2020. Other global bodies that explicitly prohibit encryption are the central banks in Myanmar and Zimbabwe.