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Why was Bitcoin banned?

2016-05-27 00:00:00

Bitcoin appeared back in 2009, and from the first days of its appearance, the attitude towards it was twofold. Ordinary users were happy with the advent of cryptocurrency - it simplified the process of making transactions, made costs minimal, and made it possible to achieve confidentiality when making payments. On the other hand, the legislative sphere turned out to be helpless before the new currency and unable to control it. Lets take a look at why Bitcoin was banned? What is the cause of the problems?

 

Cryptocurrency in the world

The legal status of cryptocurrency is causing a lot of controversy in the legislature. But why has Bitcoin become so controversial? The problem is that it “encroaches on” sovereignty, the ability of special bodies to control financial flows. Many people point out that Bitcoin is the ideal currency, but for a country that does not exist. Cryptocurrency creates problems in the financial sector, eliminates transparency in the field of monetary transactions. This is why Bitcoin is banned in Russia and several other countries around the world.

On the other hand, not everything is clear. For example, in China, Bitcoin is prohibited by law, but only for legal entities. In Bolivia, Bitcoin ceased to exist. There are two versions of why this happened. Officially, the country cares about its citizens, and according to the unofficial, cryptocurrency may be more stable than national money.

In Ecuador, the situation looks different. There, the cryptocurrency was banned due to the creation of its own network, which does not need competition. Virtual coins were also banned in Kyrgyzstan, where the government went on to intimidate the population. The authorities of Bangladesh have acted even steeper, they are imprisoned for up to 12 years for using cryptocurrency.

As for European countries, the USA, Canada and others, the attitude towards Bitcoin is more cautious. Thus, the European Banking Supervision Service has repeatedly stated that the use of cryptocurrency is not recommended until the development of a clear regulatory framework. But private companies are not particularly afraid of experiments in the field of cryptocurrency. So, recently there have been companies that store cryptocurrency on specially created servers. The same PayPal system partially supports the cryptocurrency, without fear of current difficulties.

 

What are the reasons for the ban?

Cryptocurrency is becoming dangerous for many components of life. It is free, independent, does not allow the country to earn money on its citizens. But this is on the surface. What are the underlying reasons why Bitcoin is so stubbornly banned, and many countries have already banned. The reasons are as follows:

- Bitcoin, like any other electronic currency, can be used for money laundering or tax evasion.

- The system does not have a controlling center, so it will not be possible to appeal or reverse the deal. That is why Bitcoin has been banned in many countries - under the pretext of protecting its citizens from financial fraud that is irreversible.

- Virtual money is not secured. Also, there are no organizations that would be responsible to the holders of the cryptocurrency. The transactions are more speculative and there is a risk of losing the Bitcoin price in the future.

- Bitcoin propaganda poses a threat to the financial system. This is one of the answers why Bitcoin was banned in Russia. The confirmation step was the fact that seven sites about cryptocurrency were banned by Roskomnadzor.

- Legislatively, cryptocurrency is not regulated or limited. At the same time, the process of realizing the danger that emanates from electronic coins has just begun in many countries. However, governments do not always make informed decisions.

In Russia, the opinion was put forward that cryptocurrency is a US development aimed at financing revolutions and terrorism.

 

Legislation in Russia

The issue of banning cryptocurrency, despite the restrictions already in force, is constantly being discussed in Russia. Today there are talks about the introduction of criminal liability for the emission of funds belonging to the category of monetary surrogates (including cryptocurrencies), as well as for conducting transactions with it. In addition, the Ministry of Finance proposed to introduce a pre-trial blocking of resources that issue Bitcoin and other cryptocurrencies. The introduction of the ban was planned back in 2014, but the proposals made did not have time to pass the authorities necessary for making a decision.

The issue of cryptocurrencies was again raised against the background of the desire of the Qiwi payment system to create its own cryptocurrency called Bitruble. Again, there is talk of criminal liability for people working with cryptocurrency. In turn, numerous members of the Bitcoin community were perplexed. Instead of exploring the possibilities of cryptocurrency, as is done in other countries of the world (including the West and the United States), the government is taking the path of prohibitions. But why not consider Bitcoin in terms of potential profits for the state treasury. Moreover, the President of the Russian Federation and the head of the Central Bank spoke in favor of the possibility of using cryptocurrency.

 

Banned exchange operations

While many users wonder why Bitcoin was banned, the government continues on a tough path. So, in the near future it is planned to introduce a ban not only on emission, but also on exchange operations. There are plans to classify the exchange of cryptocurrency as illegal foreign exchange transactions with the corresponding consequences.

The Ministry of Finance said that the exchange of Bitcoins will not be subject to a fine (as it was before), but criminal liability. At the same time, the question only concerns cryptocurrencies. As for related technologies, the government is more loyal here. For example, the same Blockchain is considered a useful area and will continue to develop in the future. The main purpose of the ban is to restrict exchange transactions involving the ruble and cryptocurrency.

Why is Bitcoin banned in Russia, and what are the current bans related to? The answer to these questions is essentially identical. The governing bodies insist on the risks faced by users and the financial system, terrorist group financing and money laundering. It is believed that the emergence and development of Bitcoins in the real economy is dangerous. To protect against such risks, the classical banking system was introduced.

An interesting fact is that the issue of tracking Bitcoin will be taken over by the Investigative Committee. At the same time, for violation of the law (exchange of rubles for cryptocurrency and vice versa), a punishment of up to 5 years in prison will be provided. Therefore, the violation itself belongs to the category of moderate severity.

As for experts, they consider such bills as a weakness of the financial system, which is not able to take control of a promising cryptocurrency. Instead of competent regulation, the government takes drastic measures - criminal prosecution. At the same time, the new bill will be discussed already in 2016.

In the new bills, it is finally planned to assess such terms as monetary surrogates and cryptocurrency, which will help build an attitude towards electronic money and prevent violations in this area. If the bill is approved, Russia will join the group of countries where Bitcoin is prohibited. For violation of the law, there are two options for punishment - a fine of up to 2.5 million rubles or a prison of up to 10 years.