Head of Russian Investigative Committee Calls for Making Cryptocurrency Operations a Crime

15.01.2016

Alexander Bastrykin, head of Russian Investigative Committee, promises to make cryptocurrency operations criminally punishable.

He stated that in his interview to Russian government publication Rossiyskaya Gazeta, speaking about his agency’s combat with corruption, terrorism, cryptocurrency, and Ponzi schemes.

“It is necessary to fight against varuous soap bubbles on financial market, namely finanical tools not backed by any assets. Often, market oversaturation with such tools results in financial crises that later infects other markets,” he stated.

According to Bastrykin, other government agencies side with the Investigative Committee’s stance. For that reason, he said, his agency proposes to “establish criminal responsibility for issuance and circulation of money surrogates”.

“Necessity of introducing criminal punishment for the said act is justified by wider distribution of so-called virtual currencies, with bitcoin being the most prominent of them,” Bastrykin stated.

These words, however, were followed by quite an amazing statement:

“Bitcoin exchange rate has gained 1000% during last two years.”

He also mentioned that bitcoin transactions are anonymous, free, and lack centralized control.

“Anonymity of payments incentivizes individuals to use virtual currency for criminal purposes, including drug and weapon trafficking, terrorism funding, and tax eviction,” Bastrykin said.

He also said that bitcoin has evident advantages over ruble, Russian national currency.

“According to experts, turnover amount of money surrogates in Russia has reached 1 per cent of GDP. Once the parameter exceeds 10 per cent, the tool will pose a real threat to the state’s financial stability. Uncontrolled expansion of money supply in the turnover at the expense of the surrogates will result in devaluation and gradual supersedure of ruble from currency market. Eventually the state could lose its money issuance monopoly and revenue from this kind of activity,” Bastrykin stated.

“It would be better to suppress distribution of money surrogates at early stages of the market’s development,” he added.

Bastrykin’s statements stand in stark contrast to the newly proposed edition of the Administrative Violation Code, which implies de-facto legalization of cryptocurrency operations. The legislative initiative has been submitted to the State Duma in December 2015.

However, Russian Ministry of finance calls for banning virtual currencies. Recently, deputy minister for finance, Alexei Moiseev, stated that the draft law would not go any further than the first reading.

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Tags: regulation, Russia