by Joseph Young
The central bank of Russia, better known as the Bank of Russia, does not plan to impose a ban on Bitcoin.
Olga Skorobogatova, the Deputy Governor of the Bank of Russia, announced on January 12 that the central bank nor the government would prohibit the usage of bitcoin. Skorobogatova emphasized the complexity and sophistication of bitcoin and explained that the government should not impose a ban on Bitcoin until it fully understands both technical and economic aspects of the digital currency.
“Because Bitcoin – a private currency, it became clear that there is not so simple and beautiful as it is written in books and magazines. Position regulator and agencies – that we would not like to specifically prohibit something, and to understand how to relate to it, and on this basis to build a regulatory framework.”
Over the past few years, the legality of Bitcoin in Russia was left as ambiguous, mostly due to the government’s refusal to establish a regulatory framework for the usage and trading of bitcoin.
While Vladimir Putin, the President of Russia, addressed Bitcoin on several occasions, local users and businesses were still unclear whether the citizens were permitted usage of Bitcoin in the country.
In mid-2015, Putin said in a televised forum that bitcoin can be used to “some account” and that it is possible for the Russian people to use bitcoin on a daily basis. However, Putin’s lack of awareness of bitcoin and its attributes as a global store of value made it more difficult for the general population to adopt the digital currency.
“As an accounting unit, these ‘coins’ or whatever are they called, they can be used, and their adoption becomes wider and wider. As some kind of unit in some account, probably, it’s possible,” said Putin.
This ambiguity in the Russian bitcoin industry and exchange market significantly limited the growth and establishment of robust bitcoin infrastructure necessary. As a result, most users began to trade bitcoin using P2P methods or platforms, such as LocalBitcoins.com.
Bank of Russia Deputy Governor Sokorobogatova’s remark on Bitcoin is the first clarification a government-owned entity provided to the Russian bitcoin userbase. It is also the first occasion in which the Russian government revealed its stance on bitcoin and its unwillingness to ban the digital currency.
In fact, Petr Aven, the head of Russia’s largest commercial bank Alfa Bank, said that if Bitcoin cannot be stopped or banned, which is proving to be true of as of late, Russia must consider leading the mainstream adoption of Bitcoin.
During his presentation at the Gaidar Forum, Aven further emphasized the uselessness and impracticality in attempting to ban or exclude bitcoin from the traditional realm of finance.
“If the movement can not be stopped, we must lead. Excluding Bitcoin is useless. It is and will be. So I think that the Central Bank, and in general from any regulator proactive stance – should try to understand what will happen. Private currency does not stop; their use does not stop. How to make sure that they do not weaken the ruble is an entirely separate issue. But the ban – it is totally useless,” said Aven.
The clarification provided by the Bank of Russia will highly likely spur the growth of bitcoin within the country in the near future, establishing necessary infrastructure for mainstream adoption. Also the news out of Russia will settle worries regarding the recent panic from news out of China. With both China and Russia are warming to bitcoin and most likely preparing a path to sensible and beneficial regulation, bitcoin looks to have a succesful year in emerging markets in 2017.