Bitcoin Sites Blocked by Russia in Avoidance of Shadow Economy Rise
The recent ban of bitcoin-related sites from Russia has raised great distress in the country. The court decision has been based on the contribution of bitcoin to shadow economy, even though there has been no direct warning of the legislation becoming effective. The crisis of Russia’s currency, the ruble, is most likely linked to the decision.
Roskomnadzor is the Federal Service for Supervision of Communications, Information Technology and Mass Media in Russia and has blocked bitcoin sites all over the country. In a controversial decision, five cryptocurrency websites have been blocked from Russia and the justification of such blockage has to do with the contribution of bitcoins to the increase of shadow economy. Since Russia is in need of capital and there is no tolerance in hidden funds going in and out of the country without being declared, this action came as no surprise.
Bitcoin.org, Bitcoin.it, BTCsec.com, Indacoin and Coinspot.ru, Bitcoinconf.ru and hasbitcoin.ru are the seven (so far) websites that have been blocked, causing great discontent among Russian citizens. Part of the court’s decision that has led to the ordering of ISPs to block these sites reads as follows: “On the Central Bank of the Russian Federation, the official monetary unit (currency) of the Russian Federation is the ruble. Introduction in Russia of other monetary units and production of money substitutes is prohibited. In such circumstances Cryptocurrency, including “Bitcoin” are money substitutes, contribute to the growth of the shadow economy and cannot be used by citizens and legal persons on the territory of the Russian Federation.”
There had been evidence of the will of the Russian Government to ban bitcoins long before the recent incident. Back in February, the Russian authorities named bitcoins illegal and warned their citizens against them. They even supported the notion that such monetary methods create solid ground for funding terrorism and of course promote money laundering.
Later on, in September, there was an eloquent statement by the Deputy Finance Minister of Russia called Alexei V. Moiseev that foresaw what was going to happen next: “People can play with their chips, and they can call them money, but they can’t use these surrogate currencies as tender. 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. 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.”
In response to the ban, Coinspot.ru has managed to tackle with the problem (temporarily, maybe) and changed its extension to Coinspot.io. According to recent comments of a representative of the company: “Luckily we were warned by our hosting provider and managed to change our domain address from coinspot.ru to coinspot.io and informed our visitors beforehand…Obviously the court judgment was fabricated, no one ever contacted us, none of the bitcoin information is legally banned in the country, there was just a couple of bill drafts, criticized by Ministry of Economics btw…”
This ban is certainly directly linked to the currency crisis of Russia, with the ruble having lost a significant percentage of its value and having reached the point where the 1998 collapse occurred. It is interesting to see how this situation is going to end up and who is going to benefit ultimately.