On February 21, 2020, it was revealed in a letter that the Central Bank of Russia and Federal Security Service (FSB) are banning all cryptocurrency payments but will leave exchanging cryptos to fiat open.
Prior to this agreement, the FSB was unsure on whether it was even possible to ban cryptocurrencies like BTC as a payment option, and the two departments have debated on how best to regulate digital currencies.
According to a letter from the Deputy Prime Minister Dmitry Chernyshenko seen by Russian portal Baza, the two Russian departments that have struggled to agree on their position on regulating cryptos have finally decided to ban it altogether.
While the central Bank of Russia has been stern on its position that all things related to cryptocurrencies should be banned, the FSB was open to legalizing and recognizing a regulatory structure that would favour miners.
The FSB remains open to exchanging cryptos for Russia’s national currency ruble or other fiat currencies but only via specific operators.
However, those looking to exchange digital coins for cash, or hold cryptos portfolios will have to undergo some identification scrutiny, failure to which would result in administrative or even criminal charges imposed by the FSB.
This Ban Resembles That Of China’s
Russia seems to have taken the same stance as China on crypto: big on blockchain, ban on cryptocurrencies.
Russia’s Central Bank is also pursuing blockchain and has proposed a legal framework for tokenizing assets in the near future. But the two states differ in China’s ambition of a cryptocurrency of their own, the digital Yuan, which is trying to take on Libra since the country views it as a U.S. initiated project.
Banning cryptos in Russia could be due to several reasons, but the major one is likely the instances of fraud committed using digital assets in the country.
There are also instances where Russians use government-issued computers to mine cryptocurrencies, and the new ban is possibly meant to restrain that.
The Future of Crypto in Russia
Russia’s Central Bank has long been pessimistic over digital currencies and has stood firm against any crypto-affiliated transactions.
Given the new consensus between the FSB and central bank on digital assets regulation, the country could see a sharp decline in the use of cryptocurrencies.
Moreover, the FSB is looking for ways to identify all cryptocurrency owners in the country regardless of the value they derive from these digital assets, which may further discourage mass adoption amongst the general public.