With new laws ready by next spring, Russia seems poised in banning the use of virtual currencies such as Bitcoin. Several reasons were bothering regulators notably the cross-border nature of virtual currencies, the fact that transactions are anonymous, and the fact that there is no supervisory body to oversee them.
Authorities are on the belief that currencies such as Bitcoins are perfect for illegal transactions. These include funding terrorism, buying and selling of illicit goods, money laundering and many others. This is rife for debates because traditional currencies have already been used to finance terrorism and other illicit activities.
The authorities is seen as applying a heavy hand on virtual currencies, yet closing their eyes on another fact that companies such as Qiwi or webmoney and others are also using a certain kind of “digital currency”.
The government authorities declared that they will open criminal proceedings on those who mine digital currency, and also against those who use them for transaction. At the same time, they are asking regulators to ban access to exchanges and online stores that accept Bitcoin.
Deputy Finance Minister Aleksey Moiseev says that what Russian lawmakers want is to allow people to use their crypto currencies however they want it, but they are prohibited to use these as “surrogate currencies as tender”.
Aleksey Moiseev added: “We will discuss this law in the current session of parliament, and possibly even pass it then, or at the very latest by spring next year. We are currently dealing with comments from the law enforcement agencies, about the specifics of legal measures, and we will take their remarks into account. But the overall concept of the law is set in stone.”
Another bothersome fact that troubles authorities is that these crypto currencies are quite volatile. They have wild fluctuations simply because they are not actually backed by any assets. People caught in this situation stands to lose a lot of money as the prices fluctuate.
A concrete example is that only a few months ago one Bitcoin cost $1,200 in competition with the price of gold. Now, a Bitcoin is worth around $478, a huge drop in value. Russian authorities regard Bitcoin as much too unstable, plus it has a high volatility. Its decentralized nature also puts it out of governmental control, the most serious threat as far as Russian authorities are concerned.
The Russian Central Bank had already taken the time to caution people of the dangers of virtual currencies, most especially those that are not under its control. Other countries have taken the same actions on this matter. There are others that have embraced it without being really confident in its potential.
While others are on the belief that virtual currencies are being used to support terrorism is likely to be true, the other side of the coin is just as true where actual currency is used in financing terrorism. Regular dollars, Euros and many others have been used by extremists for decades in funding their activities.
Whenever transactions are in cash, the doors are virtually closed to overseeing parties. Tracking are best done when there is a paper trail to follow. Cash transactions are simply much too hard to keep track of, if at all. In spite of these difficulties, Russian monetary authorities need to reevaluate their positions on digital currencies. Bitcoin might just be the way the Russian government could go around the current international embargo.
The actual issue is that the Russian government seriously opposes the Bitcoin is the decentralization aspect of these digital currencies. Coupled with this is the very troublesome fact that no government has control over the digital currency, and that people are allowed freedom like never before.