Russia has banned digital currency Bitcoin under existing laws and dubbed use of the crypto-currency as "suspicious".

The Central Bank of Russia considers Bitcoin as a form of "money substitute" or "money surrogate" which is restricted under Russian law. However, unlike use of restricted foreign currencies, Bitcoin has been outright banned.

Reports claim some Bitcoin exchanges in the country have shut doors following the announcement overnight by the General Prosecutor of the Russian Federation.

The announcement relates to transactions of Bitcoins, but the legality of owning the currency is currently unclear.

Bitcoins allowed users to anonymously purchase goods and services online, a feat which has concerned law enforcement authorities.

Bitcoins can be used to purchase everything from steak to sports cars, but also gave rise to a thriving black market most illustrated by the infamous drug store Silk Road, which after years of operation was recently shuttered by the FBI.

Use of the crypto-currency has been banned outright in China and Kazakhstan, in Iceland for foreign trading, and potentially Thailand, but appears to be embraced across the United States, Britain, Brazil and the European Union.

Central regulatory authorities in many other countries have said there were no plans to attempt to regulate the currency.

Last month the US Library of Congress issued a report examining the regulatory approaches national financial authorities have taken to the currency. [pdf]

Deakin University Faculty of Business and Law Professor Louis De Koker said the decision went against the trend of Western governments of embracing the currency.

"What I find fascinating is the United States, which is normally concerned with risk, is embracing Bitcoins," Professor Koker said.

"It makes me wonder whether they have cracked the crypto."

He said the Russian ban appeared curious but not out of character for the country.

The ban has sparked interest and bemusement on Bitcoin forums with users speculating about the ability of the Russian Government to enforce its ban.

The regulatory move contrasts with plans revealed this week by the US Postal Office to adopt Bitcoins under a simplified model intended to open the currency to non technical people. The model would be "years away" from possible adoption according to insiders.