Russia bans bitcoin exchange and becomes more hostile towards the currency

By Daniel Zo Bitcoin, Russia, Ban, BTC-e, BitStamp, BitRuble

The Bitcoin status in Russia has been unclear ever since bitcoin came out and started gaining in popularity. According to recent reports, it seems like Russia went ahead and blocked one of the largest bitcoin exchanges: BTC-e.

If you’re not yet aware, trading platform BitStamp decided to voluntarily ban Russian IPs, in order to avoid legislative issues with the country, which is getting considerably more hostile towards bitcoin and other digital currencies. In fact, these developments represent the first effects of a couple of bills, meant to criminalize cryptocurrencies, and other money substitutes on the Russian financial market.

However, it’s interesting to see these events considering the fact that last month, there have been several reports pointing towards the possibility of cryptocurrencies being fully legalized in Russia. Together with this, there have also been attempts to get the government to accept the idea of creating its own digital currency, the BitRuble. Regardless of the low value of the ruble, due to the economic sanctions imposed on the country, the Russian government refused the idea. This was surprising at first, as the blockchain system isn’t banned in the region, and creating an altcoin in the region, based on the blockchain, would technically be legal.

For those who do not know, at this moment in time, bitcoin ownership in Russia is illegal, and those caught holding the coin can face a 4-year prison sentence, and have to pay a fine that is of roughly $19,000. Based on this, while there are several bitcoin-related companies in Russia, there is no legislative framework designed to allow them to legally enter the market.

While the government’s position towards the digital currency is somewhat understandable considering the fact that if adopted, it could further weaken the ruble, Russia should also understand that giving people more methods of paying for products can act as an incentive, and encourage the flow of money across its financial sectors.

Due to the lack of legislative framework, and the laws against the currency, bitcoin ownership, trading and owning bitcoin-related businesses is close to impossible in Russia. The main solution towards fixing this problem would be to create a proper regulatory system, which would clearly outline what the country’s citizens are allowed to do and not, when it comes down to using digital currencies. However, this is also difficult, as the Russian Central Bank, is also against the currency.

So far, BTC-e, which interestingly enough, offers support in Russian only, will be forced to cease operations in the region, to avoid any conflicts with the Russian authorities.

With everything that has been outlined so far in mind, what do you personally think about Russia’s attitude towards Bitcoin? Let us know your thoughts in the comment section below.