A Russian official, ranking among the top from Russia’s State Duma (the Russian Parliament), is of the view that bitcoin can act out of instinct and can topple an entire government. At a press conference, Nikolay Arefyev reckoned that bitcoin is a perfect tool for smuggling cash out of a country and Russia has suffered a lot in the past due to it.

The official put forth some facts that previously, an amount nearly half of the Russian annual budget, became victim to this capital exodus and if things go like this, soon the economy will come crashing down. Arefyev, further stated that cryptos were created in order to weaken official control over the financial flow.

If cryptocurrency worked, we would be completely ruined today because all financial flows would be taken out of Russia. And Russia would end. Because cryptocurrencies were created to ensure that the state does not control the flow of capital.

Arefyev, suggested that cryptocurrencies were made in the first place, to dismantle incumbent control over the national finance. It has been an excellent tool to take money out of a country without alarming the regulating authorities and stay out of the radar. Though this might strike as impressive, the governments suffer as a whole along with the nation.

READ MORE: ‘No Crypto Popularity, No Regulations’: Russian PM’s Logic

This is because the transaction does not comply to the rules and the taxation regulations that are a must for such cases. Cryptos allow anyone to bypass these regulations, thus damaging the economy.

If cryptocurrency worked, we would be completely ruined today because all financial flows would be taken out of Russia. And Russia would end. Because cryptocurrencies were created to ensure that the state does not control the flow of capital.

Bitcoin is TOO risky and Shady! – Arefyev

Bitcoin turned up, at the scene but was not popular right away. This is because of its immense use in dark marketplaces as bitcoin was not visible over the financial radar by the regulating authorities i.e was untraceable. Arefyev mentioned that now that bitcoin is popular, it still is tracing back to its roots and is misleading huge cash flow, out of the country. Arefyev presented a number, 210 trillion rubles (or $3.25 billion) that matches half of the annual Russian budget. He further mentioned that this is the amount of cash that has been taken out of Russia since 1994.

Recently, a Dutch conman scammed a lot out of the $2.2 million bitcoin fraud referring exactly to his side of the story that cryptos are too risky to be regularized into the fiat system, currently. This conman, Berry van Mourik, allegedly started off a bitcoin mining investment scam which eventually had him being apprehended by the authorities. Authorities told that this was not his first scam and that he was an executive in a firm that had bitcoin mining rigs for the investors. The investors were promised a monthly return of 0.3 bitcoin.

Nikolay Arefyev shed light over these scams explaining that this must not be taken as a loophole in the bitcoin structure, rather these sort of scams pose a greater threat to the national economy by the day.

Bitcoin makes the Rich, Richer

As per Arefyev, bitcoin was based (on the back end) to make the rich, richer. The mechanism was created to cater for tax evasion along with the ease of carrying money out of the national borders of a country. The Russian official told that this is perfect for the wealthier people but exactly opposite for the governments. Whenever, people take their money across international waters, they don’t have to pay taxes for it, hence the rich-get-richer scheme.

READ ALSO: 600 Bitcoins Have Been Collected in Three Years to Bring Down Vladimir Putin

Why would bitcoin pile up such a controversy to begin with? Arefyev suggested that bitcoin was initially created for this purpose. It might just strike as a gigantic controversy theory by the Russian official. Arefyev explained that the entire crypto setup was meant to allure investors in for the cash flow. According to the scheme that Arefyev accuses the crypto market of, the cash flow would then be used to strengthen the hold and to develop the systems, both software-wise and innovation-wise. Meanwhile, the rich were meant to sneak their way out of the system leaving no tracks behind.

Most of the cryptos including bitcoin and Litecoin work over the principle of decentralization. This means that the transactions are possible but there is a democratic environment that keeps a check over privacy. Whenever a transaction is conducted, every node in a system is intimated.

Can Bitcoin be Integrated into the Russian Currency?

Arefyev explained that integrating bitcoin into the Russian fiat system would mean disaster. This would obviously be because of the aforementioned risks that involve in crypto dealings. The Russian official described that it would be ‘useless’ to integrate bitcoin into the Russian fiat system to begin with. He further mentioned that it would be an aid us for time to come, if we ban the cryptos altogether. He is of the view that cryptos are an imminent threat and can result in a global financial catastrophe.

READ ALSO: Putin Wants to Keep a Check on Bitcoin and Cryptos Through Firewall

The official elaborated over the reason which as per him, is mainly the cash flow, towards offshore holdings, which weaken the economy. He stated that although there are other negative outcomes to it as aforementioned, this one damages nations as it had done for Russia in past times.

A similar stance was shown by the Democratic Congressman, Brad Sherman over twitter as he proposed a similar remedy for the economy of the United States. He planned to banish the use of cryptos by Americans in order to get to the root of the economic crisis, which he considered to be none other than the cryptos.

I look for colleagues to join with me in introducing a bill to outlaw cryptocurrency purchases by Americans, so that we nip this in the bud.

Furthermore, he also said that,

An awful lot of our international power comes from the fact that the U.S. dollar is the standard unit of international finance and transactions. It is the announced purpose of the supporters of cryptocurrency to take that power away from us.

Putin assess and attacks cryptos!

The Russian president himself stepped into the scene and offered his take over the matter. He clarified that the cryptos have not been regulated as of yet in Russia. Therefore, he ordered the authorities with the relevant charge to implement and adopt crypto regulations by July 1, 2019. He explained that cryptos have been hitting the Russian economy real bad. Back in 2017, Putin also mentioned cryptos in his warning that bitcoin specifically lures in criminals.

Putin elaborated over the potential threats that can be an alarming situation for the Russian economy as a whole. These threats feature heavily in the cryptos and of course in bitcoin.

…opportunities to launder funds acquired through criminal activities, tax evasion, even terrorism financing, as well as the spread of fraud schemes.

The Future of Cryptos in Russia

Elina Sidorenko, the chairperson of an interdepartmental working group of the State Duma, was tasked with assessing risks involved in dealing with cryptos and managing the risks to limit them. In January, 2019 she said that there is no chance that cryptos will ever be merged Russian financial system, at least for the coming three decades. This was her response regarding the rumor that the Russian government is willing to buy $10 billion in bitcoin in order to kick the effect of US sanctions aside.

With the Russian government being so skeptical of the entire concept of cryptos, one might crunch a quick guess that the government has always looked to the worst case scenario with the digital assets. Nevertheless, the fate of the cryptos reside between these two concepts. Which one gets pushed first will decide the future for these digital assets.

READ ALSO: Russian President Vladimir Putin Pushes For Crypto Regulation By 2019