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(Feb 06, 2014) On January 27, 2014, the Central Bank of the Russian Federation issued an information letter entitled "On Using Virtual Currencies, Specifically Bitcoin, in Transactions." (Press Release, Central Bank of the Russian Federation (Jan. 27, 2014).) In the absence of legal acts that would regulate the use of Bitcoins, this statement appears to be the first official document that defines the government position on the growing use of the virtual currency in Russia.

The statement stopped short of declaring Bitcoin transactions illegal, but cited article 27 of the Federal Law on the Russian Federation Central Bank prohibiting the release and distribution of monetary substitutes in Russian territory. (Id.) The national currency regulator warned Russian individuals and legal entities that virtual currencies have a high risk of losing value and are not secured and that there is no entity to accept liability in the case of Bitcoin devaluation or loss. (Id.)

The statement recommended that Russians refrain from exchanging Bitcoins for goods, services, and Russian or foreign currencies. (Id.) According to the Central Bank, individuals and legal entities might unintentionally be involved in money laundering and terrorism financing activities if they conduct Bitcoin transactions, because of the anonymous nature of Bitcoin-related operations. (Id.)

According to the statement, the Central Bank will view the services of Russian legal entities aimed at assisting in the exchange of Bitcoins for goods, services, or currencies as a "dubious activity," and those entities may be prosecuted under legislation on countering money laundering and financing of terrorism. (Id.)

Author: Peter Roudik More by this author
Topic: Banks and financial institutions More on this topic
 Financial services More on this topic
 Internet More on this topic
Jurisdiction: Russia More about this jurisdiction

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Last updated: 02/06/2014