Russia to Ban Selling Bitcoin to Individuals

28.08.2017

Russia’s ministry of finance intends to ban selling bitcoins to individuals, the deputy minister of finance Alexei Moiseev stated in his interview with Rossiya-24 news channel.

According to him, the ministry proposes to consider cryptocurrencies a financial asset, and sell them via the Moscow Stock Exchange under the supervision by the Rosfinmonitoring. Only qualified investors will be able to access buy and sell operations.

“As for so-called traditional cryptocurrencies like Bitcoin, there are, of course, different opinions. There’s opinion that it’s a Ponzi scheme, and generally it’s hard to deny that. In this connection, investment in such a tool is highly risky. That’s what defines our approach towards their regulation. We offer not to call it a currency, and not to regulate it as a currency. There’s a notion of “other property” in the Civil Code, so we may classify it as a financial asset and allow only qualified investors to buy and sell it at exchanges,” Moiseev said.

According to the official, the Ministry of Finance is in contact with Russia’s Central Bank and the Moscow Stock Exchange regarding this issue.

“We want to make it in such a way as to let qualified investors who for some reason want to invest in cryptocurrency and make money out of it have such an opportunity. But it may involve only the Moscow Stock Exchange. It will ensure protection of consumer rights and fulfilment of contracts in case one of the parties to such a contract is dishonest. Presently it’s impossible: people who buy and sell cryptocurrency do it at their own risk, and, unfortunately have no legal protection.”

The second challenge, according to Moiseev, is to stop illegal use of cryptocurrencies.

“We see that both in Western Europe and here using cryptocurrency for illicit operations has become more often. That’s because AML mechanisms aren’t quite determined. So, our second goal is to enforce KYC regulations so that the regulator would always know who buys and who sells. There are instances when bitcoin is used for money laundering.”

Moiseev was hopeful the Ministry of Finance will be able to present this conception in a short while, and if supported by the Government, will start working on new legislation.

When asked if he meant private investors that should not be allowed to buy and sell bitcoins, Moiseev confirmed the intention to restrict regular people from doing so.

“I said qualified, not private. Just any individual? No, because it’s very dangerous investment that can make one lose their money. Bitcoin may become more expensive or devalue if computer capacities go cheaper. If the technological advancement causes them to cheapen, bitcoin will also cheapen because it’s essentially the means of payment for such capacities. So, average people can’t estimate the likelihood of such an advancement. But we have the notion of qualified investors. The central bank regulates this area, and there are rules stipulating the status of a qualified investor. An individual can easily be one, but he or she has to undergo some tests. That’s an international best practice,” he added.

Earlier, the head of the interdepartmental working group on cryptocurrencies Elina Sidorenko told ForkLog that the bill introducing cryptocurrencies to the country’s legal terrain included provisions on establishing private exchanges for individuals and legal entities. She said that those platforms had to be private in order to avoid state monopolism for cryptocurrencies.

Sarkis Darbinian, the head of legal practices at NPO Roskomsvoboda, on the other hand, suggested that certain bans are not off the table as the authorities seeks to control currency flows.

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Tags: regulation, Russia