After China, Iceland, Thailand and Canada, Russia has made it illegal to use Bitcoin in the country citing Article 27 of Russian federal law. Russian authorities have issued warnings against using the virtual currency saying that treating it as a parallel currency is illegal, reports Reuters. The country was also worried about the use of Bitcoin for money laundering and financing terrorism.
The Russian Prosecutor General’s Office said last week that anonymous payments and cyber currencies are money substitutes and cannot be used by individuals or legal entities. He was referring to article 27 which states that:
“The ruble shall be the official monetary unit (currency) of the Russian Federation. It shall be equal to 100 kopecks.
The issue of any other monetary units or quasi-money shall be prohibited in the Russian Federation.”
“Citizens and legal entities risk being drawn – even unintentionally – into illegal activity, including laundering of money obtained through crime, as well as financing terrorism,” the statement from the office read.
This eerily reminds us of the warning issued by RBI in 2013, following which there were raids on several Bitcoin companies in India by the Enforcement Directorate. Some others were allowed to function as long as TDS was charged for every transaction. RBI has not clarified its stance on Bitcoin following these events due to which there is still a lot of uncertainty around its legal status in India. An expat had sent a letter to the RBI seeking clarity on the legal status of virtual currencies here, and he threatened to approach the courts if RBI does not make its stance clear.
Blow to Bitcoin?
The ban in Russia is a blow to the virtual currency as it has the third highest number of active nodes globally after US and UK. By looking at the number of nodes we can come up with a hypothesis that Russians are the third highest users of the virtual currency globally. Nodes are the part of the Bitcoin network that generates new Bitcoin units every time a solution is presented for a mathematical problem.
It is worth noting that the price hasn’t reduced dramatically like it did when China outlawed Bitcoin. In that case, the price of Bitcoin fell from $1,200 to $554 or so, but recovered again to $850 within a couple of weeks. The value of Bitcoin has now reduced to around $700 due to the announcement from Russia, halt in withdrawals by Japanese exchange MtGox and increasing number of Bitcoin thefts from online wallet services in the past few weeks and news of .
Aaron Koenig, founder and organiser of Bitcoin Exchange Berlin is of the opinion that Bitcoin does not need anybody’s approval. “Just download the Bitcoin software for free and use it,” he said while speaking to Economic Times.
You can check bitlegal.io to see the legal status of Bitcoin across the world.