Russia’s Ministry of Economic Development has reportedly criticized a proposed bill by the Ministry of Finance to ban Bitcoin in the country. The proposed law, referred to as “On the Central Bank,” was reportedly drafted upon Vladimir Putin’s request back in March.
It opposes such measures more because of the sweeping effects they would have on other industries such as telecoms, banks and retailers. They would be unable to manage rewards programs, which would technically fall into the proposed law’s definition of units of account/exchange that are not legally recognized.
For example, Sberbank’s “Thank you” program would technically be illegal.
A similar complaint was lodged by Walmart and other retailers in over 3,700 comments on the originally proposed BitLicense for New York.
The National Payments Council said the Finance Ministry’s definition of money would outlaw bonuses and therefore, “could throw [Russia’s] payment service market a few years into the past, leading to a fall in the number of non-cash payments for goods and services.”
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Russia’s ruble was one of 2014’s worst performing currencies. It has been speculated whether Bitcoin will gain traction in the country both as a currency and as a payment system, and that the proposed ban is part of an effort to stop the ruble’s bleeding. Two weeks ago, the bitcoin-ruble rate (BTC/RUB) soared even as USD-denominated prices slumped and volumes approached record levels.
There has been reportedly some talk among EU states of blocking Russian banks from SWIFT, though SWIFT insists that it has no such plans. Peter Darakhvelidze is development director at WebMoney, a Moscow-based global payments company. He said that the developments underscore the need for the government to support financial innovation instead of trying to ban it.
Should the reports prove true and the Ministry of Economic Development prevail, it would mark at least the fourth time this year that Russia has changed its stance on banning bitcoin.
Earlier this year, officials made remarks strongly implying bitcoin use as illegal but never expressed such views outright. Weeks later, bitcoin was formally declared as illegal. But in the summer, officials said that “such instruments should not be rejected” while they take a deeper look into the matter.
Even during the ban, conflicting reports arose of a criminal investigation against BTC-e and Metabank. A government website initially indicated criminal proceedings but later retracted the claim saying the site was hacked.