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The country’s Deputy Finance Minister unveiled that bitcoin may soon become a legal payment method, only a year after the Russian authorities threatened cryptocurrency users with jail time.
Russia has announced that it may recognize the digital currency as a legitimate financial instrument next year, as the country is looking to prevent illegal money transfers. The central bank and the government are currently preparing a new legislation on virtual currencies, Bloomberg reported.
Just a year ago, the Russian Finance Ministry warned that regulators would punish bitcoin users, saying that the virtual currency makes it difficult to trace money launderers.
“The state needs to know who at every moment of time stands on both sides of the financial chain,” said Alexey Moiseev, the country’s Deputy Finance Minister. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”
Russia has always been vocal about its opposition towards the virtual currency. The fact that bitcoin is not controlled by any government or central authority, makes it a perfect tool for illegal transactions. Last year, regulators in Russia proposed a list of penalties for those involved in bitcoin selling, mining and issuing, including fines as highs as RUB 2.5 million and jail sentences of up to seven years.
According to Washington-based Global Financial Integrity, crime, corruption, and tax evasion in Russia led to at least $211.5 billion in illicit outflows from 1994 to 2011. Meantime, illegal money transfers reached $552.9 billion.
Bitcoin is under an increased scrutiny in some countries as governments seek to boost control over money supply. In March, three leading bitcoin exchanges in China, which accounts for the largest bitcoin trading volume, suspended all bitcoin withdrawals in response to the government’s requirements. The move was part of the country’s effort to stem capital outflows.
A few days ago, Japan passed the law that recognizes bitcoin as a legal payment option in the country. After the recognition of digital currency, two of Japan’s biggest retailing companies, Bic Camera and Recruit Lifestyle, started accepting the cryptocurrency as a payment option.
To enable bitcoin payments, Bic Camera partnered with the Tokyo-based bitcoin exchange bitFlyer, while Recruit Lifestyle teamed up with Japanese bitcoin exchange operator Coincheck. In general, Japan has great chances to lead the world’s digital currency sector in the near future. Currently, there are about 4,500 stores that accept bitcoin.
The legalization of digital currency is expected to fuel the adoption of bitcoin, what will in turn drive its price. Following the implementation of the new law, the price of bitcoin demonstrated an upward movement, rising to $1,136.