Russia Becomes The First Country To Completely Ban Bitcoin

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Last week Central Bank of the Russian Federation (Bank of Russia) released a statement to warn their citizens to stay away away from any Bitcoin related service whether it’s mining, transfers or as payment processing. Central Bank also made it clear that any individual or company found using Bitcoin will be automatically charged with “supporting terrorism”.

Central Bank Of Russia

Anonymity of the virtual currency is one of the reasons why the government refused to consider it as a legitimate financial instrument, as has been recently disclosed several cases using Bitcoins for money laundering and illegal trade on the Internet i.e. Silk Road. Following is the translated version of official statement.

The Bank of Russia said that recently in the world have a certain distribution of the so-called “virtual currency”, in particular, Bitcoin. By “virtual currencies” and there is no provision for them legally obliged entities. These operations are speculative in nature, carried out on the so-called “virtual exchanges” and carry a high risk of loss of value.

The Bank of Russia warns citizens and legal entities, primarily credit institutions and non-credit financial institutions, the use of “virtual currency” for them in exchange for goods (works, services) or cash in rubles and foreign currency.

According to article 27 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)” issue in the Russian Federation monetary surrogates prohibited.

Due to the anonymous nature of the activity for the production of “virtual currency” unlimited range of actors and to use them for transactions citizens and legal persons may be, including unintentionally involved in illegal activities, including the legalization (laundering) of proceeds from crime and terrorist financing.

The Bank of Russia has warned that Russian legal entities providing services for the exchange of “virtual currency” in rubles and foreign currency, as well as for goods (works, services) will be considered as a potential involvement in the implementation of suspicious transactions in accordance with the legislation on counteraction to legalization (laundering) proceeds of crime and financing of terrorism.

Last December China restricted their Banks to stop transactions with Bitcoin exchanges but they didn’t made any move on Bitcoin mining and it’s trading while Bank of Russia banned Bitcoin in any form.

Edit : Metabank.ru, a popular russian exchange shut down it’s operation completely. Their homepage says “We decided to suspend the exchange in order to avoid additional risks that may affect the quality of service. Our lawyers, together with partner lending institutions, seeking uncompromising way out, which will allow us to legitimately grounds offer a reliable and profitable service.”

Edit 1 : BTC-e one of the most popular Bitcoin, Litecoin exchange is under the radar of criminal investigation. More details here.

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