Russia is Concerned With Bitcoin Tax Evasion and Laundering, Regulations to be Imposed
Vladimir Putin, the President of Russia, has told reporters in Russia that the government and its central bank are concerned with the usage of Bitcoin by investors and users to evade taxes, launder money, and finance terrorism.
In a statement obtained by RT, Putin said:
“In a number of countries, cryptocurrencies are becoming or have already become a full-fledged means of payment, as well as a means of investment. Cryptocurrencies usage, at the same time, bears significant risks, I’m aware of the [Russian] Central Bank’s position. First of all, [Bitcoin grants] opportunities to launder funds acquired through criminal activities, tax evasion, even terrorism financing, as well as the spread of fraud schemes.”
What is the “Position” of the Russian Central Bank?
Putin had explained that the government is well aware of the position of the Russian central bank in regards to Bitcoin and the local cryptocurrency market. Earlier this year, Finance Minister Anton Siluanov revealed that a ban on Bitcoin and other cryptocurrencies such as Ethereum is unlikely. But, the Russian government is considering the imposition of strict regulations and policies for cryptocurrency businesses and investors.
In early September, Siluanov stated:
“The state understands indeed that cryptocurrencies are real. There is no sense in banning them, there is a need to regulate them.”
Hence, the Russian government and its central bank are not necessarily considering a ban on Bitcoin but the possibility of introducing a nationwide regulatory framework for investors and licensing program for businesses.
Why is Ban Unlikely and How Would Regulations Benefit Both the Government and Businesses?
An outright ban on Bitcoin would lead to an increase in over-the-counter (OTC) market trading and trading activities around cryptocurrencies in underground economies. If Bitcoin trading moves to OTC and black markets, it becomes increasingly difficult for the Russian government to oversee Bitcoin activities and regulate its Bitcoin market.
In September, the Chinese government and local financial authorities imposed a ban on Bitcoin and cryptocurrency trading platforms. But, within one month since the ban, the Chinese government’s finance news publication Xinhua has revealed that Chinese officials are considering the introduction of a national licensing program for Bitcoin exchanges in fear of transactions and trading activities moving to unregulated OTC and black markets.
CnLedger, a trusted source of cryptocurrency news in China, stated:
“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”
Even If Russia Bans Bitcoin Trading, It Would Have Minimal Impact on Bitcoin Price
Russia only accounts for 0.12 percent of global Bitcoin trades. That is, a daily trading volume thirty times smaller than that of leading South Korean cryptocurrency exchange Bithumb.
— Joseph Young (@iamjosephyoung) October 10, 2017
Despite rumors surrounding Russia and its government’s plan to restrict Bitcoin usage, the Bitcoin price is still increasing at a rapid rate, towards a new all-time high at $5,100.
Image License: William Murphy, For commercial use