
Russia Bans Bitcoin - irunbackwards
http://techcrunch.com/2014/02/07/russia-bans-bitcoin/
======
usaphp
What a ridiculous title and a story itself, absolutely ridiculous, where do
they get the information from to post such bold titles. Bitcoin is NOT banned
in Russia, there is a warning to russians posted by central bank of Russia
[1], warning is to notify people about dangers of using bitcoins, that's it!
There is NO law that bans bitcoins in Russia, people are free to use if they
want to, goverment is just warning you that it might be dangerouse.

Like smoking cigarettes, there is no law that bans you from smoking, but the
health organizations are warning you that it can be dangerous for your health.

I am sick of this sort of stories which make to top of hacker news like the
recent one by NBC about being "hacked" in Sochi [2] which was pathetically
demolished by HN community [3]

[1]:
[http://www.consultant.ru/document/cons_doc_LAW_158121/](http://www.consultant.ru/document/cons_doc_LAW_158121/)

[2]:
[http://www.youtube.com/watch?v=waEeJJVZ5P8](http://www.youtube.com/watch?v=waEeJJVZ5P8)

[3]: [http://blog.erratasec.com/2014/02/that-nbc-
story-100-fraudul...](http://blog.erratasec.com/2014/02/that-nbc-
story-100-fraudulent.html)

~~~
VladRussian2
" В соответствии со ст. 27 Федерального закона «О Центральном банке Российской
Федерации» «официальной денежной единицей (валютой) Российской Федерации
является рубль. Введение на территории России других денежных единиц и выпуск
денежных суррогатов запрещается». Получившие определенное распространение
анонимные платежные системы и криптовалюты, в том числе наиболее известная из
них – Биткойн, являются денежными суррогатами и не могут быть использованы
гражданами и юридическими лицами. "

translation:

"According to the title 27 of the Federal Law "On Central Bank of Russian
Federation" "the official currency of Russian Federation is rouble. Issue
(introduction) of other currencies and currency surrogates on the territory of
Russia is prohibited". Anonymous payment systems and cryptocurrencies,
including the most popular - Bitcoin, are currency surrogates and can't be
used by physical persons and corporations. "

This determination - bitcoin as a currency surrogate - was made by the "expert
group" consisting of high level bureaucrats from the enforcement side, ie.
Central Bank, FSB, police (police in Russia is one big vertically integrated
structure from local to federal level), Attorney General office.

~~~
usaphp
> "the official currency of Russian Federation is rouble, Issue (introduction)
> of other currencies and currency surrogates is prohibited

How is that different from any other country? Its a generic law that every
other country has, you can't start spreading a new currency in United States
as well because "official currency of United States is US Dollar".

We all know what happened to a "Liberty Dollar" in United States [1]:

 _In 2006 the U.S. Mint issued a press release stating that prosecutors at the
Justice Department had determined that using Liberty Dollars as circulating
money is a federal crime. The press release also stated that the "Liberty
Dollars" are meant to compete with the circulating coinage (currency) of the
United States and such competition consequently is a criminal act._[2]

[1]:
[http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Governme...](http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Government_response)

[2]:
[http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=p...](http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=press_release&id=710)

~~~
ripter
I thought you could spread a new currency in the US, but no one has to accept
anything other than the official US currency. Which was the reason why things
like tokens and bitcoins can exist.

~~~
baddox
That would be a more reasonable law, but that is not the law.

~~~
nullc
Except it is the law. Liberty dollars were intentionally similar in design
with US currency— any random joe would confuse them. Literature from their
maker encouraged (with indirect language) people to pass them off as US
dollars and they were priced to make it profitable to do so (E.g. $8 in melt
value silver, sold to you for $15 with a "$20" stamped on the front). (See:
[http://truthalliance.net/Portals/0/Archive/images/news/2012/...](http://truthalliance.net/Portals/0/Archive/images/news/2012/12/ldf_silver_large.jpg)
plus there are a whole _additional_ set of laws covering the minting of coins
of precious metal in the US which aren't relevant for Bitcoin discussions).

The counterfeiting charges in the Liberty dollar case basically went
uncontested.

See also:
[https://en.wikipedia.org/wiki/List_of_community_currencies_i...](https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States)

To do otherwise rapidly runs into a mess of regulating every single private
interaction people have.

~~~
baddox
That's not my understanding of the law or that case, as summarized in the
Wikipedia article:
[http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Governme...](http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Government_response).
The relevant section of US code says

> Whoever, except as authorized by law, makes or utters or passes, or attempts
> to utter or pass, any coins of gold or silver or other metal, or alloys of
> metals, intended for use as current money, whether in the resemblance of
> coins of the United States or of foreign countries, or of original design,
> shall be fined under this title or imprisoned not more than five years, or
> both.

The creator of the currency was convincted for violating this section of code,
among others. This is completely separate from imitating US dollars or
counterfeiting. I can find no indication that imitation of official US
currency was the primary or only justification for his conviction. Every
source I can find indicates that simply competing with official US currency is
a crime.

~~~
nullc
> any coins of gold or silver or other metal, or alloys of metals,

And you think this is applicable to Bitcoin because?

In any case, I was going to chide you to read the ruling, but it seems to have
vanished offline. It was previously online. Fascinating stuff.

Here were the actual charges (from the BVNH wikipedia article):

Von NotHaus was charged under counterfeiting laws with one count of conspiracy
to possess and sell coins in resemblance and similitude of coins of a
denomination higher than five cents, and silver coins in resemblance of
genuine coins of the United States in denominations of five dollars and
greater, in violation of 18 U.S.C. § 485, 18 U.S.C. § 486, and 18 U.S.C. §
371; one count of mail fraud in violation of 18 U.S.C. § 1341 and 18 U.S.C. §
2; one count of selling, and possessing with intent to defraud, coins of
resemblance and similitude of United States coins in denominations of five
cents and higher, in violation of 18 U.S.C. § 485 and 18 U.S.C. § 2; and one
count of uttering, passing, and attempting to utter and pass, silver coins in
resemblance of genuine U.S. coins in denominations of five dollars or greater,
in violation of 18 U.S.C. § 486 and 18 U.S.C. § 2.

You need to be somewhat careful with non-court sources on this, people on
NotHaus' side have been making a strenuous effort to cast this as persecution
of alternative currencies, and they've had some help from some inept law
enforcement people who— as usual— don't understand the law. If you go and
actually read the indictment and conviction you'll see that it wasn't really
at all.

~~~
baddox
I never said anything about Bitcoin. I responded to the comment which said "I
thought you could spread a new currency in the US, but no one has to accept
anything other than the official US currency."

And yes, I read about his convictions. 18 U.S.C. § 486 is the section I pasted
in my previous comment.

------
pdx
From BTCE (google-translated from Russian)

Dear participants of the project BTC-e.com! In connection with decision-making
in relation to the crypto-currency in Russia working with Qiwi suspended
indefinitely, as well as with other payment systems in Russia. All financial
obligations will be met in full without the means available additional
commissions. encourage you to use the system okpay (USD, EUR), interest on the
conclusion on it is reduced to zero. apologize for any inconvenience.
Sincerely support btc-e.com

------
filmgirlcw
The source appears to be the Russian Government[1]

[1]:
[http://genproc.gov.ru/smi/news/genproc/news-86432/](http://genproc.gov.ru/smi/news/genproc/news-86432/)

~~~
gtt
This is not a ban exactly in a sense that there is no law baning bitcoin, but
by results of this meeting they (Prosecutors office mostly) decided that some
existing law could be used against not clear who. The whole situation is not
clear either.

~~~
Smirnoff
IANAL, but this official news states clearly that bitcoin is illegal in
Russia. Really, it doesn't get more clear than a Prosecutor citing a law and
exemplifying bitcoin as being illegal.

You don't need a new law to ban something. All you need is one stupid official
to apply an old law to a new concept.

Based on the old law, one cannot mine, trade, accept, and even use bitcoin to
buy stuff in Russia.

~~~
nikcub
It is 'illegal' in the same way all foreign currency (more accurately,
anything that isn't the ruble) is illegal - that is, you need specific
permission to trade, hold or settle in any other currency.

In Russia currency is extremely regulated - you won't find rubles outside of
Russia and within Russia what you can do with other currencies is extremely
limited (and requires permission/licensing). They did this to stop locals
fleeing the ruble and causing a crash. At one point 90%+ of all cash
transactions in Russia were in foreign currency - so these laws stem from that
period.

The best way to interpret this guidance would be as a reminder from the
Russian government that bitcoin is not a replacement nor alternate currency
for the ruble, and the same laws apply to it as apply to the USD and other
foreign currencies.

This is far from a 'ban' on bitcoin, you can still hold bitcoin in the same
way you can hold USD or any other foreign currency. You just can't settle
domestic transactions in bitcoin.

------
andreash
"It's still the same warning. no more, no less"
[https://bitcointalk.org/index.php?topic=452894.msg4990618#ms...](https://bitcointalk.org/index.php?topic=452894.msg4990618#msg4990618)

------
pmorici
It's my understanding that this isn't about Bitcoin per say but a general law
that makes it illegal to transact in any foreign currency unless you are a
bank licensed for Forex. USD and EUR and similarly not allowed.

~~~
nikcub
That is exactly it. Because of the instability in the economy during the 90s
where most Russians abandoned the ruble and used USD the Russians heavily
regulated all non-ruble currencies as a way to force stability.

This notice is more a reminder that bitcoin is treated as other non-ruble
currencies are. I'd assume most of the Russian based markets already knew
that.

The laws are there but they are extremely difficult to police, while you can't
just open a bank account and accept USD (which you need a license for) there
is still a large grey economy.

------
javert
Russia is a joke of a country. Their dictator just spent $51 billion looted
from the people on a failed _winter_ Olympics.

~~~
whatevsbro
_Every_ country is a joke of a country, in case you haven't noticed. The
ruling class everywhere lives large on money looted from the general populace.

~~~
javert
To _vastly_ differing degrees.

The US from 1776 to about 1880 > the US of today > Russia of today > Soviet
Union > North Korea.

~~~
whatevsbro
What I said applies to every single country in the history of the world. Is
your point that light looting is better than extreme looting + torture camps?
Sure, but it's still looting.

------
dasil003
Do they have a new source for this? It reads remarkably like the single story
posted yesterday which someone suggested could be the result of speculators
spreading misinformation through hackery or otherwise.

~~~
waterlesscloud
There was a regulatory meeting Thursday in Russia, this appears to be the
result.

Conflicting information on whether individuals can still trade in bitcoin
legally. If so, this would leave Russia in pretty much the same boat as China.

~~~
mlvljr
Coming from Russia, and skimming through related news today, I get an
impression, nothing is banned (by any means).

What they _might_ do at some point, is prohibit selling goods for bc, this is
possible.

Mining / exchanging and buying outside of the country, or buying virtual goods
will not go anywhere for sure :)

Again, another Orwellian-themed fake news about my place (or am I getting
paranoid?)

UPD: just read the article at
[http://genproc.gov.ru/smi/news/genproc/news-86432/](http://genproc.gov.ru/smi/news/genproc/news-86432/)
\-- yep, no new laws, nothing -- "measures will be taken to prevent fraud,
etc."

The overall impression is, they are going (a some point, not now) to
explicitly delegitimize cryptocurrencies as a means to make payments
officialy, but not ban / outlaw using the mining tools, or exchanging the
bitcoins.

~~~
eatitraw
I'm from Russia too, and my understanding that the situation is not that
bright: they clearly declare that <<bitcoin is "money surrogate" and cannot be
used>>(used as money?).

What they _might_ do at some point is in fact allow trading bitcoin itself
just like China. They declare that they are concerned "protecting interests of
users of cryptocurrencies", so there is hope.

~~~
mlvljr
We'll see, so far this has resulted in bc <-> Russial PayPal clones /
alternative operations being (willingly, I'm sure) blocked by that exchange
site from the top comment.

------
new_test
Could someone please ELI5 if I was a very wealthy Russian criminal involved,
say, in counterfeit, drugs, human trafficking and/or technological scams, how
exactly can bitcoin help me "launder" my wealth?

~~~
negamax
Actually it's very easy. And interesting thought experiment. Biggest advantage
of Bitcoin is to be able to transfer money outside the current banking system.
Have you noticed the news how major banks are to screen customers etc. Pretty
obvious that state agencies can easily notice any large transfer and
investigate it further. With Bitcoin it's impossible. Let's go step by step

1\. I have some cash which I want to stash away from government.

2\. My options are a) Buy property (India's property boom) b) Buy gold c)
Store the cash somewhere (say inside mattress)

For

a) I can be identified or property can be lost. As can't buy it on my name

b) Can't easily transfer internationally. Theft fears etc.

c) Inflation, fire, water

With Bitcoin. I buy Bitcoins in cash (localbitcoins). Or use third party
accounts (same used for buying gold or property).

1\. I have full access to the money

2\. Can take it anywhere and convert it to local currency

Only downside would be if Bitcoin crashes i.e. loses all value or a lot of
value within short span. But if more and more businesses start using it.
Virgin, Overstock etc. then chances of that happening would get lesser and
lesser.

~~~
vecinu
I don't agree with what you've said about being able to buy Bitcoins if you
had a significant sum of money.

I define significant here as $50,000 or more.

It is not easy to buy BTC in cash through LocalBitcoins. I know first hand how
intimidating the process is (even after the 10th time) because you don't know
who you're meeting and what their intentions are. Secondly, there aren't a lot
of people willing to transact $50,000+ in BTC. This is usually a supply
problem as these people don't have hundreds of BTC to sell.

Using third party accounts is also silly as that leaves a paper trail. If any
of your cash goes through someone else's hands, it is most likely recorded.

To take this further with your 'solution', you can't simply convert this
significant sum of money into local currency easily. There is still going to
be a paper trail of you converting the money from BTC and if you have done any
selling on exchanges, you'll know you need your identity verified.

If I were someone shady, I would NOT turn to BTC to launder my money, it
doesn't make a lot of sense.

People often confuse cryptocurrencies and BTC in general with being totally
anonymous. They're not.

~~~
nullc
Some reasons why that might not be so easy:
[http://www.coindesk.com/localbitcoins-users-criminal-
charges...](http://www.coindesk.com/localbitcoins-users-criminal-charges-
florida/)

------
at-fates-hands
I would think with Russia and China banning BitCoin, it would make the
currency more valuable. This seems counter intuitive to how the BTC market
responding by crashing after the Chinese announcement.

Does BTC follow the same economic principles as standard currency. Such as
your basic supply/demand, when supply goes down, demand goes up and price goes
up. Or is it immune to such things?

Just curious. . .

~~~
oillio
I think it is performing as you would expect. When China/Russia bans Bitcoin,
it reduces the demand as law abiding citizens stop using it. Reduced demand
leads to reduced prices.

~~~
leobelle
> Reduced demand leads to reduced prices.

This is probably true in this case. In the case of physical goods it is not
always true. If there is continued demand but less of it, prices can rise for
some goods because the fixed costs of manufacturing increase on a per item
basis as you can't buy materials in as much volume. Increased costs of
manufacturing an item will lead to higher prices for the consumer.

Thus reduced demand does not always lead to reduced prices.

~~~
oillio
True. This is economics, there are no hard and fast rules. In fact, I would
say that the moment a hard and fast rule is discovered, is the exact moment
that it becomes invalid.

However, even in your example, the higher prices will only come in time. This
is assuming we are talking about a commodity good that is traded on an open
market.

The immediate effect of a sudden reduction in demand is an increase in
inventories on the sell side. If there is no expectation of resumption of
demand, the inventory holders are likely to panic and sell at a reduced price
to cut inventories. This is a classic case of "first out the door wins" and is
what crashes are made of. They will also cut manufacturing (or mining or
farming), but the affect of this on the price will only manifest once the
reduction in production makes it through the supply chain. For something like
corn, this could take upwards of a year.

Obviously, all this is affected by a large number of variables: warehousing
costs, profit margins, manufacturing complexity and lead time, pricing power,
tooling costs and other capital expenditures, etc.

------
ck2
[http://bitlegal.io/nation/RU.php](http://bitlegal.io/nation/RU.php)

------
Steko
"you can’t prevent Russians from using Bitcoin"

Haha, tell that to the guys with the jackboots and machine guns.

~~~
sabbatic13
Well, point taken, but when it comes to doing things under the radar on the
web, you must admit, Russians are just really good. For a certain slice of the
online population, such laws won't change much.

------
amurmann
Well, I understand why the Russian government is doing this. I don't have much
confidence in the Ruble and am pretty sure I am not the only one. So BTC might
be a viable alternative. An alternative that the Russian government has no
control over.

------
mrfusion
Just curious if there are any countries that are very pro bitcoin?

~~~
gregcrv
Probably not... I don't think it's in any country's interest for now.

But here's an interesting story I just found:
[http://www.policeone.com/police-
administration/articles/6643...](http://www.policeone.com/police-
administration/articles/6643566-Chief-asks-to-be-paid-in-Bitcoin-city-
approves/)

------
acd
We should note the timing when the world is distracted by the olympic games
starting ceremony.

------
ndesaulniers
Obligatory: In Soviet Russia, Bitcoin bans Russia.

