Experts say a Bitcoin ban in Russia would make little sense

If cryptocurrencies were fully banned in Russia, their holders would go underground, and the state would lose the ability to collect taxes from this market. This is the view expressed by experts interviewed by ForkLog.

CEO of Indefibank, Sergey Mendelyev, noted that cryptocurrencies were designed with the expectation of existing under conditions of total isolation.

“If you ban [cryptocurrency] in China, so what? Do Chinese start using it less? No, of course not. They will simply become more cautious and go underground,” he said.

Law-enforcement agencies, in turn, would be unable to investigate cryptocurrency-related crimes through exchanges and trading platforms, because there would be no one to whom requests could be directed.

The potential ban on cryptocurrency ownership he called “ridiculous and pointless”.

“People still don’t understand that in the current version there could be a verse in my head whose order of words would be worth tens of millions of dollars, and no one would ever know about it. I don’t believe in a full ban; it’s completely meaningless. But if such a thing happened, it would change nothing. The market has formed; everyone knows each other; they will trade for scraps or tickets to an aquapark. And taxes would have to be forgotten,” Mendelyev noted.

The expert drew a parallel with the prohibition of casinos, which ultimately moved online and to underground dens, leaving tens of thousands out of work and the state without revenue.

Sergey Mendelyev stressed that for a final decision on the crypto market, one wish from the central bank is not enough:

“[Head of the Bank of Russia] Elvira Nabiullina is a well-known crypto opponent. It is enough to say that the Central Bank has not certified a single platform for digital financial assets ЦФА, although Sber in January filed an application. If it had the will, they would have banned it long ago, but apparently she does not resolve all questions,” he added.

There are currently the minimally necessary conditions in Russia for cryptocurrency not to require a ban, according to GMT Legal managing partner Andrey Tugarin.

He pointed to the existing law “On digital financial assets”, the recognition of digital currency as an asset for the purposes of certain regulatory acts, as well as a bill on taxation and declarations of cryptocurrency transactions. The current methodological recommendations from the central bank are not the friendliest toward crypto, but they do not exclude its existence.

“No one wins from a ban: neither the state nor the user. The potential tax take from cryptocurrency operations in Russia is around 200 billion rubles,” the lawyer explained.

He stated that regardless of the central bank’s final decision on this issue, residents of Russia will continue to use cryptocurrencies and the volume of operations will not be affected. Crypto companies will simply avoid Russia; however, the loss of Russian users will not be material for them.

“The vast majority of states have a normal attitude toward cryptocurrency; more than half of developed countries have already legalized it in some form and collect taxes from it. People declare their crypto income, and everyone wins. If Russia goes down the path of a ban, that would be a bad path,” Tugaryin noted.

EXANTE analyst Vladimir Ananyev suggested that the central bank’s initiative reflects a thaw with the PRC. And while talk of recognizing Bitcoin as a means of payment по примеру Сальвадора in Russia never occurred, in his view authorities may still begin regulating crypto exchanges analogously to traditional markets. In that case, the regulator should draw a distinction between qualified and non-qualified investors.

“All market participants simply need not to face blanket bans. Reasonable regulation will ultimately make the industry safer,” Ananyev said.

The analyst doubted that the state could stop foreign platforms from opening accounts for Russians, since “penalising them is pointless.” At the same time, crypto exchanges are far from the only way to acquire digital currency, the expert noted.

“Many traditional brokers have begun offering cryptocurrency to their clients. There are P2P platforms for buying crypto through listings, there is PayPal. In essence, a ban will be bypassed anyway; it will just be more difficult and more costly: exchange commissions remain cheaper,” Vladimir Ananyev said.

Six Nines data-center head Sergey Troshin agreed with him:

“People will monitor precedents, see whether penalties appear, and, if so, what they are. There will probably be additional challenges in exchanging cash for crypto and vice versa, but that does not mean it will be impossible to exchange; it will simply cost more.”

Evgeny Vlasov, head of Comino, is convinced that rather than tough regulation, financial institutions in Russia should focus on public education, warning about the risks of investing in this instrument.

“The very news about plans to ban cryptocurrencies looks more like an attempt to exert total control over monetary flows. The volatility of cryptocurrencies has again become a trigger in an attempt to cling to control of the flow,” he told ForkLog.

Grigory Klumov, founder of the STASIS stablecoins platform, believes that bans by the Russian central bank will in no way affect digital-asset quotes.

“The crypto market has no idea what the Central Bank of Russia is, and why it is needed. The only thing such a measure could affect is an increase in the outflow of intellectual and real capital from the country,” he said.

The expert also doubts that a negative scenario could be implemented:

“Crypto has become part of the financial system, and the effectiveness of such measures is roughly like banning rain.”

Earlier media citing Bank of Russia sources reported regulator’s plans to ban investments in cryptocurrencies.

Meanwhile, State Duma Committee on the Financial Market head Anatoly Aksakov said Russian authorities are weighing various options for regulating the industry, from a complete ban on ownership and purchases of crypto-assets to legalising Bitcoin exchanges.

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