Police in Russia arrested three men last week, charging them with illegally trading 500 million rubles (around $9 million) worth of bitcoin, the first criminal case against bitcoin sales in the country, Vedomosti reported. The arrests in Kostroma, 260 miles northeast of Moscow, demonstrate the government’s desire to crack down on money laundering, presenting a challenge to a country that wants to support cryptocurrency development, according to Forbes.

Irina Volk, a press officer for the Ministry of Internal Affairs, said the men are being charged with illegal banking. Their names have not been released.

Police found activity in bank accounts connected to 300 bank cards and sim cards used to store bitcoin. Prosecutors believe the money was moving into accounts held by family members.

Russia’s Approach To Bitcoin

Russian courts in the past have blocked bitcoin websites and exchanges to prevent people from transferring the cryptocurrency into rubles. They have not charged anyone for doing so.

Money laundering in Russia is a problem, and bitcoin and Ether present ways for people to hide cash and avoid taxes.

While Russians cannot legally transfer bitcoin into rubles, discussions are taking place in the Russian parliament about the risks posed by bitcoin exchanges.

Challenges And Opportunities

Despite the legal roadblocks, the government recognizes cryptocurrencies present opportunities in Russia. The government would like to see more of crypocurrency technologies develop within its borders. The country has the talent to make this happen.

The regulator for the Moscow Stock Exchange said in July the exchange is exploring legalizing cryptocurrency trading on the MOEX.

Alexei Moiseyev, the deputy finance minister, told Roissiya 24 news in August the exchange will initially allow qualified investors to trade cryptocurrency as a way to avoid large money laundering operations. He said it is important to be able to track cryptocurrency transactions.

Also read: Russian regulator wants to keep bitcoin away from the public

Crypto Infrastructure Slowly Evolves

The executive board chairman of the MOEX National Settlement Depository, Eddie Astanin, said the board wants to create a user-friendly and secure infrastructure for digital assets. He said the platform will provide legal and technological protection of all parties, but will increase the variety of post-trade services for entities emerging in this sector of the economy.

The country’s central and financial authorities are working on a legal framework for bitcoin, but there are no regulatory proposals at present. This could snag the process of legalizing the transfer of bitcoin into rubles. While the political will exists, the government wants to crack down on money laundering.

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