That may be about to change, however, as Russia’s Deputy Finance Minister, Aleksey Moiseev, told a group of journalists last week that his office plans to introduce legislation that would ban digital currencies as soon as next year. “We will discuss this law in the current session of parliament, and possibly even pass it then, or at the very latest by spring next year,” Moiseev said. “We are currently dealing with comments from the law enforcement agencies, about the specifics of legal measures, and we will take their remarks into account. But the overall concept of the law is set in stone.”
The move by Russian authorities is not entirely unexpected. Russia is already facing severe sanctions from E.U. and U.S. authorities over its annexation of Crimea in March, cutting off access to much of the world’s financial system for Russian businesses and individuals. This has caused very real concerns in Russia about capital flight, something the borderless nature of bitcoin could make much easier to do.
The proposed law would make it illegal for a business to accept bitcoin, and would also block access to online stores that accept it as a payment option. Bitcoin mining would also become a criminal offense under the law, as would selling bitcoin on an exchange. “People can play with their chips, and they can call them money, but they can’t use these surrogate currencies as tender,” Moiseev said.
The impact of the law is unlikely to be significant outside of Russia, and is likely to be poorly enforced within it. The country’s “underground” economy was estimated to be a staggering 40% of its GDP in 2007, and that number is likely to have grown in the last seven years. (By comparison, the U.S.’s underground economy is estimated to have been between 8% and 9% of GDP for the last decade.) With bitcoin adoption in Russia already low, a worsening economic system, a dramatically falling ruble and limited access to banking may drive bitcoin adoption in the country, regardless of its legal status.