Speaking at the All-Russian Banking Conference, Deputy Minister of Finance Alexey Moiseev stated that the bill proposing penalties for using “monetary surrogates” will finally become law this year.
Looming Ban
According to RIA Novosti, Russia’s Ministry of Finance is expected to take measures sometime this year against the usage of monetary surrogates (such as Bitcoin), as stated by the Deputy Minister of Finance Alexey Moiseev at the All-Russian Banking Conference.
The Deputy Minister of Finance stated:
“The law, which provides measures for penalizing the usage of monetary surrogates, will finally be passed this year.”
Last year, the Ministry of Finance proposed to penalize users of “monetary surrogates” including Bitcoin. However, there appears to be a rift, as the country’s Ministry of Economic Development did not react positively to the Ministry of Finance’s proposed bill. Back when the bill was first introduced, Sergey Belyakov, Deputy Minister of Economic Development of the Russian Federation, said that he is “open to any new ideas related to payment system,” adding that he didn’t think “the inability to control is a strong argument for shunning this new system.”
Nevertheless, at least seven cryptocurrency-related websites were blocked back in January 2015, with many seeing the move as a sign of things to come.
Meanwhile, the UK Embraces Crypto
As the regulatory drums beat louder, an entirely different approach is being taken by the UK government in particular, which announced a US$14.6 million research fund to look into opportunities in digital currencies.
“The government intends to apply anti-money laundering regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use,” it announced. “The government will formally consult on the proposed regulatory approach early in the next Parliament.”
Cointelegraph spoke to Cryptocurrency Foundation Russia (CCFR) chairman, Igor Chepkasov, about implications of the proposed law and the difference in approach to Bitcoin between Russia and the UK.
Cointelegraph: When do you expect them to pass the law? How can they enforce it?
Igor Chepkasov: The MinFin official who stated that the law is expected to pass this year was either drunk, suicidal, or his department has reached some sort of agreement with the Ministry of Economic Development. This is because such confidence for a Russian official can only imply any of the above.
Against the backdrop of the criticism from the Ministry of Economic Development and fixing the mistakes in the first law draft, which is lobbied for by MinFin - it is an issue of honor and saving their government posts for MinFin.
“Both the Ministry of Finance and the Ministry of Economic Development are interested in securing the right to be at the helm of the cryptocurrency market in Russia.”
What we are seeing is a conflict of interests between two competing government bodies. Both the Ministry of Finance and the Ministry of Economic Development are interested in securing the right to be at the helm of the cryptocurrency market in Russia.
Actually, the Russian authorities are dragging out this issue because their government and loyalist infrastructure is not yet ready, which will be used to regulate the market of cryptocurrency and “monetary surrogates.” Corrupt officials perfectly understand that it is possible to earn a lot of money and develop an honorable reputation here. However, they do not have the mental capacity to wrap their heads around the theory, nor the practical components of Bitcoin/ the blockchain.
This is why, as is commonly done in Russia, there will likely be a “witch hunt” where the authorities will engineer several high-profile incidents and court cases, after which they will finally ban cryptocurrency by the end of 2015.
While the law is being prepared, Russian authorities will continue to develop the regulatory infrastructure, after which it is likely that they will allow cryptocurrency to exist, but with strings attached. Meanwhile, a structure loyal to the Kremlin will be established.
CT: How do you plan to fight this?
IC: The Russian cryptocurrency community is hopelessly divided. Our calls to unite (the reason why I created this Fund) when several Bitcoin sites were blocked in Russia did not reach the intended result. Several companies closed, some changed their jurisdictions, while others simply disconnected as if they disappeared. Meanwhile others are toasting to Putin and are happy that Crimea is once again part of Russia (as if their lives got any better in result), hoping that this position will help them lobby for Bitcoin.
“The Russian cryptocurrency community is hopelessly divided.”
I am confident that there will be no one to fight this. People will let off steam in social networks and at most will hold a small meeting shouting populist battle-cries. The Russian government is a machine – an aggressive raider resorting to brutal methods. And if Russia wants something, just like a petulant child, it will throw a fit until it gets what it wants as no one will try to stop it.
With regards to our Fund and I, we will try to call and unite people for the last time. Knowing that Russia does not have a real civil society, I can confidently say that this will all be in vain. This is why I suspect that our Fund will start to focus only on one activity – give legal consulting to the arraigned and detained so-called “Bitcoin enthusiasts.” Admittedly, this is not a favorable activity in Russia and I presume that we will end up closing down due to lack of interest from the public.
CT: Do you think Russia is lagging behind other countries? For example, the UK government just pledged $14.6million towards digital currency research.
IC: Russia has hopelessly sunk to the bottom. But I would like to reassure everyone: there is still room left to fall. We will hear someone knocking from the bottom, but it will already be too late. Right now, when the UK is investing large sums of money to research and develop cryptocurrency, Russia doesn’t even have money to clothe its citizens with Russian-made clothing brands. Russians even have underwear and socks made in China. And while this is going to continue, Russia should stop bragging about its nanotechnologies, Skolkovo and other fanfare.
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