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RUSSIA decides to regulate the cryptocurrency market

posted onOctober 11, 2017
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The Russian authorities have agreed to regulate the crypto-currency market, Finance Minister Anton Siluanov said on Wednesday, cited by TASS news agency. The minister’s comment comes the day after President Vladimir Putin held a meeting that focused on cryptocurrencies in the city Sochi, one of the southernmost places of Russia, located on the Black Sea.

President Putin, who discussed the issue with Siluanov, Central Bank Governor Elvira Nabiullina, presidential economic aide Andrey Belousov, and Sergei Solonin, CEO at Qiwi Russian payment service Qiwi, told reporters that cryptocurrencies “carry serious risks” and could be used “in unlawful activities”. He also noted that it is necessary to institute the circulation of cryptocurrencies in Russia and at the same time not to create unnecessary barriers.

"The president voiced the issues related to cryptocurrencies. This includes difficulties of compliance with anti-money laundering legislation and cases related to complications of identification. That is why we agreed that the state should control the process of cryptocurrency emission and its circulation. The state should take control over it," TASS quoted Siluanov as saying.

"I won’t speak about specific parameters now but in general we agreed that the state should take a lead in this process and to regulate it on the legislative level," the finance minister said.

Siluanov’s comments echoed his earlier calls to regulate the market for cryptocurrencies. Speaking at a financial forum in central Moscow in September, Reuters quoted Siluanov as saying: "The state understands indeed that cryptocurrencies are real. There is no sense in banning them, there is a need to regulate them".

Speaking at a separate conference on financial market derivatives in Moscow on Tuesday (Oct.10), Sergei Shvetsov, Russian Central Bank First Deputy Governor, said Russia will block access to the websites of exchanges that offer crypto-currencies such as Bitcoin.

"We can not stand apart. We can not give direct and easy access to such dubious instruments for retail (investors)," Shvetsov said in reference to Russian households, according to Russia Today.

Shvetsov compared the high risk of bitcoin to a pyramid scheme. “We have seen how bitcoin has transformed from a payment unit into an asset, which is bought in order to obtain a high yield in a short period of time. This is a definition of a pyramid,” Shvetsov explained.

According to the central banker, the blockade is to protect everyday investors from bitcoin’s volatility.

“We think that for our citizens, for businesses the usage of such crypto-currencies as an investment object carries unreasonably high risks,” he said.

Bitcoin, the most popular crypto-currency, emerged in mid-2010 and allows money to be held and moved on a network of computers without any central authority or bank involved. Its initial price was less than $1 but has soared this year, from $969 to more than $5,000 in September.

In recent months, warning voices have grown louder as digital currencies have attained record valuations and the possibility of earning colossal returns in short-term has attracted many to the bitcoin arena.

China’s Central Bank was the first to restrict access to the cryptocurrency market in a move made in September and South Korea's Financial Services Commission (FSC) followed suit. Slovenia's financial watchdog issued a warning yesterday stating that digital currencies are not regulated and are not guaranteed by the Bank of Slovenia or any other government entity.