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Is Russia Set to Ban Bitcoin Pay?

Is Russia Set to Ban Bitcoin Pay? 101
Source: iStock/Oleg Elkov

Russia’s increasingly confusing cryptocurrency policy continues to develop – and the latest curveball is a proposed ban on payments made using Bitcoin and other cryptocurrencies.

Per a report from media outlet Izvestia, the country’s Central Bank and the regulatory Federal Financial Monitoring Service (known locally as Rosfinmonitoring) are preparing to issue a ban on all forms of crypto pay.

The news outlet says a “source familiar with the matter” informed it of the authorities’ intentions.

Izvestia says that the Central Bank has not confirmed the report, but indicated that it would support such a measure, which would likely seek to outlaw both purchases made with cryptocurrencies and payments made to employees in Bitcoin and altcoins.

The media outlet says that the Ministry of Finance would also likely support a crypto pay ban.

There are no confirmed reports about the possible penalties violators of the proposed ban would have to face, but Izvestia says,

“There are rumors about penalties, including possible criminal liability, with jail terms of five to eight years mentioned.”

The same media outlet quotes Antonina Levashenko, head of Moscow-based university RANEPA’s Russia-OECD Center, as stating that the move will not do away with the legal gray area that cryptocurrency operators currently find themselves in, but instead just deprive the government of tax revenue it could have garnered from cryptocurrency transactions.

Especially, when Russian bankers and their lawyers appear to have uncovered creative legal loopholes that could let tax authorities in the country tax crypto holders – without even having to change the country’s taxation code. Moreover, Soyuzmash, a body of Russian military and civilian vehicle makers wants the country’s Central Bank to grant it permission to accept cryptocurrency payments in international arms deals – as an attempt to circumvent sanctions.

However, as reported earlier in November, as Russia's crypto legislation is taking a confusing shape, local experts do not rule out that it might effectively stop Russians from legally trading in Bitcoin, Ethereum and other major altcoins on regulated domestic exchanges.

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