Bank of Russia Opposes Cryptocurrency Legalization, Worried About 'Loss of Control'

The head of the Central Bank of Russia has spoken against the legalization of cryptocurrency at a meeting between President Vladimir Putin and representatives of the Russian business circles and associations. Meanwhile, the finance ministry is drafting a bill to legalize cryptocurrencies such as bitcoin and regulate their circulation.

Also read: Russian Governor Invites Cryptocurrency Miners to Set Up Mining Farms in Leningrad

Central Bank Worried About Loss of Control

Russian President Vladimir Putin met with representatives of the Russian business circles and associations on Thursday. The meeting was attended by over 50 business leaders, CEOs of leading companies, banks and public organizations.

At the meeting, Elvira Nabiullina, the head of Russia’s central bank, spoke out against the legalization of cryptocurrency in Russia. This was conveyed to journalists on Thursday by the president of OPORA Russia public association, Alexander Kalinin, according to Tass. Regarding cryptocurrencies, the central bank “opposed their legalization in the Russian Federation,” he explained, noting that:

Elvira Nabiullina said that the central bank is against, because this is actually a loss of control over the money flows from abroad.

Early this month, news.Bitcoin.com reported on the Bank of Russia issuing a statement warning about the risks of digital currencies including bitcoin as well as initial coin offerings (ICOs). “The Bank of Russia considers it premature to admit cryptocurrencies, as well as any financial instruments nominated or associated with cryptocurrencies, to be circulated and used in organized trades and in clearing and settlement infrastructure on the territory of the Russian Federation for servicing transactions with cryptocurrencies and derivative financial instruments on them,” the bank’s statement read.

A few days after the above statement was issued, Nabiullin said at the Moscow Financial forum 2017 that cryptocurrencies will not be admitted to the Russian market as money surrogates, Tass reported at the time. She was quoted saying:

The use of cryptocurrency as a monetary surrogate is actively proposed for the calculation of goods and services, in our view, this has the risk of undermining monetary circulation and, of course, we will not allow the use of cryptocurrency as a money substitute.

Finance Ministry Favors Legalization

While the central bank opposes the legalization of cryptocurrencies, the Russian finance ministry is drafting a bill to legalize them, according to the Finance Minister Anton Siluanov early this month. News.Bitcoin.com reported on him stating that the draft law, which provides the legal framework for the circulation of cryptocurrencies in Russia, will be prepared by the end of this year.

As the legal framework is being drafted, discussions are underway regarding how to define cryptocurrency. Deputy Finance Minister Alexei Moiseev proposed in August for cryptocurrencies including bitcoin to be regulated as financial assets and be listed on stock exchanges, such as Moscow Exchange. However, he also suggested that they should only be available to qualified investors. This idea did not receive strong support from other government officials.

The finance minister suggested at the Moscow Financial Forum that, instead of restricting them to qualified investors, they could be made available to anyone in the same way federal loan bonds (OFZ) are currently.

First Deputy Prime Minister Igor Shuvalov also made a statement following Moiseev’s suggestion. Regarding Moiseev’s proposal, he said “this is only the proposal of experts,” RIA Novosti reported. He added that there is still no official definition or legislation of cryptocurrency but this matter will be seriously discussed “in the near future.”

What do you think of the Russian Central Bank’s stance on cryptocurrency? Let us know in the comments section below.

Images courtesy of Shutterstock, Kremlin, Russian Central Bank

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