Russia blocks crypto step by step

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3 years ago

The Russian Government deems to against crypto currencies.

This past few days we talk about issue and stance of the crypto currencies over the world and we already see the progress of the state of crypto in some major powerhouse country that could influence it. Like USA,Europe, and China but wait of course we can't forget that there still Russia which is also consider as one of the most powerhouse country in world. there is no one in world could ignore this country so we can't also ignore its influence which we can assume to have big factor for the future of our beloved crypto currencies.

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In the event that Russia is consider to be one of the world's most important bitcoin's market but however its seem the Russian government is willing to block the blockchain transactions.

Roskomnadzor, Russia's telecommunications services regulator, has blocked access to LocalBitcoins' portal in the country, which is a major source of traffic to the peer-to-peer exchange.

When trying to access—a mirror of the .com site focused on serving customers in the country—traders find themselves with a blank page after being censored by the regulator. To access the portal, Russian users must use a VPN that masks their actual location.

So far, Russian traders seem to have remained quite active on LocalBitcoins, and customer ads on the site have not stopped. This could indicate that traders were already prepared for—or used to—this type of censorship.

Which they should have been. LocalBitcoins was previously blocked by Roskomnadzor four years ago. Moreover, last month, Binance announced it too was blocked. However, the site is no longer in the government's blacklist database.

And Russia had telegraphed its intentions earlier this summer, declaring restrictions on access to the LocalBitcoins portal on July 21, 2020, based on the justification that the site could be disseminating illegal information to the public.

That coincided with an overhaul to Russia’s cryptocurrency laws. Though it remains legal to own Bitcoin and other cryptocurrencies in Russia, they’re now illegal to use for payment.

Despite the government's complicated relationship with Bitcoin, Russians love crypto. The country accounts for almost 20% of LocalBitcoin’s total operations and ranks first in terms of cryptocurrency trading in P2P markets.

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If we remember before that Russia is prohibits buying goods using bitcoin which update their crypto law last July 23 2020

Russia has passed a bill that legally recognizes cryptocurrencies such as Bitcoin—but doesn’t allow them to be used to buy anything. 

The third reading of the law recognizes digital currency “as an aggregate of electronic data capable of being accepted as the payment means” and gives it legal status, but adds it “cannot be used at the same time to pay for any goods of services,” TASS news agency reported today.  

In May, draft bills revealed that buyers of cryptocurrencies such as Bitcoin could be handed hefty fines or up to seven years of prison time.

One bill said that the issuance of crypto in Russia would all but be prohibited and those already holding digital assets would have to register them with the authorities and give explanations on how they were acquired. 

But the approved version of the law is not quite as strict—those holding Bitcoin or Ethereum just can’t use them for much of anything, though the law does appear to give holders the legal right to buy and store crypto as an investment under certain conditions. "Possession of digital currency, its acquisition and transfer by legal means are allowed only if declared," the law states.

According to TASS, cryptocurrencies “can be issued, purchased and sold and registered within the framework of special information systems” and “systems and their operators shall conform to Russian laws and stand filed in a relevant register kept by the Bank of Russia.” 

The report adds that Russia’s Central Bank will play a major role in regulation. “The Central Bank will have the right to determine features of digital assets accessible by qualified investors only,” TASS reported.

Cryptocurrencies have long been a confusing topic in Russia with no real legal framework given to digital assets, though President Vladimir Putin has previously said crypto is a magnet for criminal activity

And unlike many other countries around the world, Russia’ Central Bank has expressed skepticism on having its own Central Bank Digital Currency. 

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There is also a time that the government has pass a bill that you could get prison if you buy bitcoin with cash in Russia.

Draft bills that could effectively deem cryptocurrencies illegal in Russia—if they come into force—have been filed by a group of deputies with the country’s parliament, the State Duma. According to a report published by local news outlet RBC on Thursday, leaked documents propose to punish crypto users with hefty fines or even up to seven years of prison time.

According to the report, the draft bills—that first surfaced in Telegram channel “OrderCom” and were later allegedly confirmed to be authentic—were forwarded to Russia’s Ministry of Economic Development earlier this week.

One of the draft bills aims to prohibit the issuance and all operations that involve cryptocurrencies on the territory of Russia while individuals and enterprises won’t be permitted to accept crypto as a form of payment. People that already hold cryptocurrencies would be required to register them with tax authorities and explain how their cryptos were acquired.

Another draft proposes to add new sections to the country’s criminal law for illegal operations with digital assets. For example, if the bill passes, companies that issue or operate digital assets “using sites registered in Russia or technical equipment located in Russia” could potentially be fined for up to two million rubles ($27,800) if they don’t receive approval from a special register at Russia’s central bank. Individuals would be facing fines of up to 500,000 rubles (roughly $7,000).

Additionally, "for violation of the rules for transactions with cryptocurrencies, if they are used as payment for goods or services,” companies would have to pay as much as one million rubles ($13,900), individuals—up to 200,000 rubles ($2,800).

The same charges, but “if major or especially large damage was caused to citizens, organizations or the state, or if these actions led to enrichment on a large or especially large scale,” could result in fines of up to one million rubles ($13,900), imprisonment for up to seven years or community sentence for up to five years.

“Cryptocurrency purchases in Russia for cash or by transfer to accounts opened with Russian banks” are similarly punishable under the proposed laws.

The end of all crypto in Russia—or not?

Dmitry Kirillov, a senior tax lawyer at Bryan Cave Leighton Paisner and a teacher at Moscow Digital School, said that if these proposals are approved and come into force in their current form, it will mean the end of any cryptocurrency circulation in Russia. As property, crypto will lose value because it cannot be sold. “Mining or exchanging 3.5 bitcoins will result in criminal liability,” he added.

Kirillov confirmed that individuals, including private entrepreneurs, and legal entities will not have the right to carry out any operations with digital currency—for example, to accept it as payment for goods or services.

“People who currently own cryptocurrencies will be forced to get rid of them before the law comes into force or risk ‘going underground.’ Goals that will be achieved this way are the direct opposite of what’s being declared. In general, the idea of ​​dropping a crypto ‘Iron Curtain,’ in my opinion, does not contribute to the development of businesses or Russia’s interaction with the world economy on a digital level,” Kirillov explained.

The expert added that he is confident that such laws—at least in their current iteration—will destroy the Russian crypto industry.

Speaking to Decrypt, Sergey Mendeleev, a former deputy of Moscow’s municipal district Yasenevo and the founder of Bitcoin exchange platform Garantex, echoed this sentiment, calling the proposal “a total ban on cryptocurrencies in Russia.”

At the same time, he suggested that chances of these new crypto law proposals actually coming into effect are slim.

“Some signs suggest that the law won’t pass. The bill was developed in 2018 by the Ministry of Finance. If it had been introduced on behalf of the government, it would almost certainly have been adopted. The State Duma adopts almost all government bills. Instead, it was submitted to the State Duma by a group of deputies, which means the law did not go through the approval procedure in the government because there is serious opposition to the bill,” Mendeleev told Decrypt.

He also noted that the proposal was written by just a few obscure authors, while “usually everybody wants to join a surefire project.”

“The bill went through its first reading in the spring of 2018. A year later they tried to resurrect it but to no avail. Nothing has changed since then. The accidental leak of an internal document doesn’t mean anything, in my opinion,” Mendeleev concluded.

And at last this day there is well another proposal move from government of Russia which they take a CBDC so they could minimized the use the influence of crypto on there own country due to the fact that even they take a risk to block it there own citizen has love the crypto and blockchain technology.

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Bank of Russia is planning to launch its ‘digital ruble’

Bank of Russia has suggested a possibility of issuing its own central bank digital currency, the digital ruble, in a new report published by the central bank today. The digital ruble will be an electronic version of the Russian national currency and will complement cash. The bank said that users will be able to use digital wallets for the CBDC and also convert their money “freely” between digital rubles into cash or bank account, and back. 

The bank reasoned that it wanted to introduce a CBDC because “digital financial technologies” usage was expanding in Russia and elsewhere since a growing number of its citizens now preferred cashless payments. In fact, the nation ranks second in the global adoption of cryptocurrencies in Eastern Europe, as suggested by a study from Chainalysis, a crypto research company. 

But when it comes to the usage of private cryptocurrencies, Russia has been strict in that regard. It has even passed new regulations on crypto-trading and mining which will not allow its citizens to use crypto for payments from 2021 onwards. Meanwhile, a group of central banks from several nations recently came together to discuss whether or not to introduce CBDCs in their jurisdictions. Russia was not part of this discussion. 

Bank of Russia aimed to acquire feedback from the public, especially financial market participants, and “experts” regarding the digital ruble project. It believed this consultation would encourage public participation in the project. The bank said it would compile the feedback and other data to eventually pilot the CBDC project. In recent news, the European Central Bank has already started surveying public opinions on the implementation of the digital euro.

It must be noted that the report did not specify a timeframe for the development of the digital ruble or whether it would launch the CBDC immediately.


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