Bank of Russia says Bitcoin cannot be used to bypass sanctions

The use of cryptocurrencies to bypass sanctions, particularly for large payments, is impossible, according to the response of Bank of Russia’s First Deputy Chairman Ksenia Yudaeva to proposals by State Duma Deputy Anton Gorelkin of United Russia. RIA News reports.

Yudaeva attributed the Bank’s position to “rising regulatory risks”.

“Regulators in the United States, the European Union, the United Kingdom, Japan, and Singapore have begun implementing measures to curb sanctions evasion through the use of cryptocurrencies. Consequently, crypto exchanges are imposing various restrictive measures against Russian investors, up to blocking access to funds,” she clarified.

The Bank’s representative added that digital currencies handle far fewer payments than traditional payment systems, so large payments can be detected and blocked by foreign regulators.

The provisions of the Law on Digital Financial Assets also prohibit using cryptocurrencies as a means of payment for goods and services. The Bank regards changing this provision as “impractical”.

Overall, the regulator fears that allowing private digital currencies onto Russia’s financial market could lead to “a number of significant risks to citizens’ welfare, financial system stability, and the country’s economic security”.

At the same time, the Bank is prepared to consider regulating mining in Russia, provided there is a legislative ban on circulating cryptocurrencies within the country.

Following the March round table, deputy Anton Gorelkin proposed allowing Russian individuals and legal entities to settle payments in digital currency among themselves and with foreign counterparties. He also advocated free conversion of cryptocurrencies into rubles, introducing a favorable tax regime for this market, enshrining the legality of mining and state support for it.

Earlier, the Ministry of Finance, based on the government-approved concept, developed a draft law “On a Digital Currency”.

For its part, the Bank of Russia presented proposals to ban Bitcoin and fines of up to 1 million rubles.

Earlier, Prime Minister Mikhail Mishustin acknowledged the need to integrate cryptocurrencies into Russia’s economy, noting that the relevant decisions should be taken together with the Bank of Russia. The regulator, for its part, continues to advocate a total ban on the circulation and mining of cryptocurrencies despite the sanctions.

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