Russian Central Bank Warns Bitcoin Users

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There has been a lot of recent news surrounding bitcoin in Russia and it’s confusing at best.

On one hand you have the head of Russia’s largest bank, Sberbank chief Herman Gref, a former finance minister who served under President Vladimir Putin from 2000 to 2007, who backs Bitcoin. He recently urged the Russian government to withdraw a bill which would limit the use of digital currencies in the country.

Meanwhile, privately-owned VTB banking group’s CEO Andrei Kostin was quoted in Davos as saying:

“Digital currencies are quite dangerous for the money market and therefore we have no plans to get involved. Russia’s monetary authorities are only now formulating their opinion about this”

Russia’s Central Bank says Bitcoin Users Can Face Jail Time

The Bank of Russia, the country’s central bank, slammed digital currencies Monday, warning that Bitcoin use can lead to criminal charges in the country. The anonymously produced “virtual currencies” can be intended by its producers for money laundering and terrorism funding purposes, the Central Bank said in a statement.

Their statements resemble the statements made by other central banks and governments throughout Asia and Europe.

The central bank has warned users that digital currencies are very high risk due to the fact they are not backed by any official bank or state entity. The statement asserts that there is also a high amount of risk due to the fact the value of digital currency is speculative in nature and exchanges are risky.

The bank stated that digital currencies should not be trusted due to their anonymous nature. This may lead users to unintentionally breaking the law by dealing with individuals utilizing digital currencies as a means of money laundering.

Included in the message was a reminder to the Russian people that issuing “alternative currencies” are prohibited by law. The follow was stated, “According to Article 27 of the Federal Law on the Central Bank of the Russian Federation (Bank of Russia) issuing monetary surrogates is prohibited in the Russian Federation.”

As far as the government is concerned, willful involvement in exchanges of digital currency means “potential involvement in the implementation of suspicious transactions.” While these statements seem clear, they create a mixed message for Russian bitcoin users.

This has left many wondering if the strong statements of the Central Bank are a result of the statements made by Gref. It is distinctly possible that Gref spoke out of place, and the Bank of Russia wanted to regain control of the situation by making it clear his comments do not reflect the position of the bank.