In July Russia passed a bill which made it illegal to use cryptocurrency as a payment method, although cryptocurrency trading and mining remained legal. However, the government hinted that the July bill was just the beginning, and that a more thorough cryptocurrency regulation bill would be passed in the near future.
Now more details are coming to light about this upcoming bill. The Russian Ministry of Finance is calling for a blanket ban on any cryptocurrency activity, including all crypto trading and mining.
If the Russian Ministry of Finance gets its way, the only crypto activities which would remain legal would be inheriting crypto, seizing crypto during bankruptcy proceedings, and seizing crypto via law enforcement. Notably, when it comes to inheriting crypto, it would be illegal to even attempt to convert it into fiat currency.
Unfortunately for Russian crypto users, this bill is expected to be passed in late 2020, and it is expected to become law by January 2021. Beyond that point, anyone using cryptocurrency would be considered a criminal.
Possible reasons for the Russian crypto ban include the government’s desire to increase its power over the finances of citizens, since if crypto is banned than citizens will no longer be able to have decentralized financial accounts, i.e. any digital accounts which citizens have will be centralized and easy for the government to seize and monitor.
Another possible reason is that the Russian government may consider crypto a threat to the Russian Ruble (RUB), and are getting rid of crypto in order to strengthen the RUB.
Regardless, the primary outcome of Russia’s decision will likely be the formation of a massive crypto black market in Russia. Throughout the world it has been proven over and over that banning something that is popular, like crypto, simply forces that industry into the hands of mafias and cartels.
In the end, this is a lose-lose decision for Russia, since this decision will strengthen criminal organizations as well as permanently destroy the legitimate crypto industry in Russia.