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Tuesday, January 28, 2014

Russian central bank's FUD against Bitcoin

Official information (not law!): Информация: Об использовании при совершении сделок «виртуальных валют», в частности, Биткойн.

Банк России предупреждает, что предоставление российскими юридическими лицами услуг по обмену «виртуальных валют» на рубли и иностранную валюту, а также на товары (работы, услуги) будет рассматриваться как потенциальная вовлеченность в осуществление сомнительных операций в соответствии с законодательством о противодействии легализации (отмыванию) доходов, полученных преступным путем, и финансированию терроризма.

According to Google Translate:

The Bank of Russia has warned that Russian legal entities providing services for the exchange of "virtual currency" in rubles and foreign currency, as well as for goods (works, services) will be considered as a potential involvement in the implementation of suspicious transactions in accordance with the legislation on counteraction to legalization (laundering) proceeds of crime and financing of terrorism.

What it really means:

The Bank of Russia has warned that providing (to the Russian legal entities!) services for the exchange of "virtual currency" in rubles and foreign currency, as well as for goods and services, will be considered as a potential involvement in the suspicious transactions in accordance with the legislation on counteraction to money laundering and financing of terrorism.

Their wording is strange. They do not state that using Bitcoin is prohibited. They say something like this:

If you are using foreign Bitcoin payment service provider (like BitPay and Bitstamp), or you are buying products and services with Bitcoin, you will be considered as potentially involved in suspicious transactions.

There is no law against doing "suspicious" transactions. Therefore it is completely legal to make such transactions.

Согласно статье 27 Федерального закона «О Центральном банке Российской Федерации (Банке России)» выпуск на территории Российской Федерации денежных суррогатов запрещается.

They write that issuing "money surrogates" on the Russian territory is illegal. But they do not claim that Bitcoin is "money surrogates" (this is only implied). Also emission of "money surrogates" is not illegal if this is done outside of the Russian Federation's territory.

Bitcoin is real (crypto)currency, not "money surrogates". Therefore Bitcoin mining is not issuing of "money surrogates".

Issuing currency (without proper licenses) is illegal in almost every country.

However, Bitcoin miners are not "issuing currency", they are just users of the network (distributed system, decentralized application). The network is issuing currency (cryptocurrency). And Bitcoin network is not a legal entity (or natural person) and cannot be controlled (or thrown to jail).

В связи с анонимным характером деятельности по выпуску «виртуальных валют» неограниченным кругом субъектов и по их использованию для совершения операций граждане и юридические лица могут быть, в том числе непреднамеренно, вовлечены в противоправную деятельность, включая легализацию (отмывание) доходов, полученных преступным путем, и финансирование терроризма.
Due to the anonymous nature of the activity for the issuing of "virtual currency" (...) citizens and legal persons may be, including unintentionally, involved in illegal activities, including money laundering and financing terrorism.

Citizens and legal entities may be involved in money laundering and financing terrorism, but they may be not involved. They do not state that every user of "virtual currencies" is involved in money laundering or financing terrorism. (Bitcoin is not "virtual currency", it is "real" cryptocurrency.)

Some manipulative headlines:

The Central Bank of Russia calls Bitcoin "money surrogates", warns it is illegal to produce it, operations with it are considered risky

The Central Bank of Russia did not describe Bitcoin as "money surrogates". This is only implied. They are trying to FUD.

It is not illegal to "produce" Bitcoin (Bitcoin miners are not "producing" Bitcoin, they are just users of the network, the network is issuing new cryptocurrency, not miners). However, it may be illegal only if Bitcoin was a "money surrogate" (but Bitcoin is not "money surrogate") and is "produced" within territory of the Russian Federation.

The only correct thing in this headline: "operations with it are considered risky".

Russia: Bitcoin users will go to jail!

I explained above why this is not true.

CEO of Russian Sberbank 'Endorses Virtual Currencies'

Bitcoin is not a "virtual currency"! Bitcoin is a cryptocurrency and it is real like other "real" currencies without intrinsic value and not backed by gold or anything (like USD, EUR, RUR, GBP and Zimbabwean dollars).

Gref is also said to have singled out Yandex Money as a first step in the direction of a virtual currency. While not itself classified as money, Yandex is an Internet payment system popular in Russia, and is supported as a payment mechanism by organisations including Skype.

Yandex Money is not "virtual currency", it is an e-currency backed by real currency (roubles). Therefore it is real as "real" roubles, WebMoney roubles (WMR), roubles in your bank account, roubles in your pocket.

3 comments :

  1. Nothing really changed for now. It`s more like informational letter with main point as "Don`t be such relaxed, we know about Bitcoin and watching you.".

    This may cause more restrictions though, as a specific opinion and sign to government and other mighty men in Russia.

    ReplyDelete
  2. Typical announcement from the corrupt government that they don't like losing any sort of control over anything.

    ReplyDelete
  3. They did not prohibit Bitcoin, they just pointed out already existing laws against money laundering and issuing "surrogate currency" and tried to scare the public away from Bitcoin making some sort of threatening statement. It is called FUD.

    This is exactly the reaction everyone should expect from Central Banks all over the world, not just Russian Central Bank.

    ReplyDelete

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