Russian crackdown on bitcoin in a major blow to the virtual currency

The Russian Government is investigating a major inter-agency crackdown on the use of bitcoins and other cryptocurrencies in Russia, in another major blow to the virtual currency.

A statement on the official website of the Russian Prosecutor General’s Office, in Russian, cites Article 27 of Russia’s central banking law as justification for a crackdown.

“The official currency (currency) of the Russian Federation is the rouble. Introduction on the territory of Russia and other monetary units issue money substitutes is prohibited.

“Certain distribution received anonymous payment systems and cryptocurrencies, including the most famous of them bitcoin, are money substitutes. They cannot be legally used by individuals or organisations.”

The statement says an “expert group” meeting was recently held by General Prosecutor’s office, chaired by its law enforcement chief, Anatoly Palamarchuk, on the grounds virtual currencies could be used for organised crime.

“We are monitoring the situation of handling the so-called virtual currencies, including its use for the purposes of laundering of proceeds from crime.

“The meeting was attended by the deputy chairman of the Central Bank of Russia, Dmitry Skobelkin, heads of relevant departments of the Bank of Russia, as well as officials of the Russian Federal Security Service, the Russian Interior Ministry and key staff of the Prosecutor General’s office.”

The statement goes on to say the Russian government does not recognise the value of bitcoins if seized, as they are purely a speculative instrument, and disputes surrounding their exchange will not be heard by Russian courts.

“Following the meeting, outlining specific joint actions of the Bank of Russia and law enforcement to prevent possible illegal money circulation in Russia, a number of specific solutions were put forward aimed at preventing violations of property rights of citizens and organizations associated with the use of virtual currency.”

Discussions on implementing the crackdown will take place at a future meeting of the expert group.