Russia has just banned the controversial currency known as Bitcoin. Here's what we know so far about this developing story.
1. Bitcoin Violates Russian Law
Russia Bans Bitcoin http://t.co/6RyzrpaGOz In Soviet Russia, chain blocks you
— Josh Constine (@JoshConstine) February 7, 2014
According to Fox News, the decision to ban Bitcoin comes down from the Russian Prosecutor General’s office. The ruling is based on a 2002 law signed into effect by Russian President Vladimir Putin that reads, “the official currency of the Russian Federation is the ruble. Introduction of other monetary units and money substitutes is prohibited.”
2. Russian Bitcoin Users Could Face Jail Time
RIA Novosti reports that Russians who use Bitcoin could face some serious jail time. While there is no legal precedent for prosecuting Bitcoin users, RIA Novosti notes that the crime of money laundering will earn you 7 years in jail in Russia, while financial activities linked to "funding terrorism" can land you in jail for 15 years.
That may sound harsh, but RT.com cites a quote from Russian officials that:
"The monitoring of the use of virtual currencies shows an increasing interest in them, including for the purpose of money laundering, profit obtained through illegal means."
3. Bitcoin May Be Moving Closer to Regulation
Respected technology blog TechCrunch reports that Russia's move to ban the currency could be the death knell for Bitcoin's unregulated days. TechCrunch cites the recent ruling of a federal judge in Texas, as well as a German parliamentary inquiry, which have put some pressure on Bitcoin in recent months to become a regulated currency.
4. Getting Banned May Legitimize Bitcoin
— Bitcoin Examiner (@bitcoinexaminer) January 15, 2014
In Salon's analysis of this week in Bitcoin news, author Andrew Leonard writes that "having Putin’s Russia declare you an enemy of the state is practically a badge of honor."
Leonard goes on to argue that the very fact that Bitcoin is being taken so seriously by authorities means that it is becoming a more legitimate form of currency. Still, all this probably means that the Russian Subway restaurant mentioned in the tweet above will have to stop accepting Bitcoins.
5. Russia Is the Second Country to Ban Bitcoin
— CoinDesk (@coindesk) January 28, 2014
The website Russia Beyond the Headlines notes that Russia is the second country to ban Bitcoin. China recently banned the cryptocurrency as well.
In addition, while Denmark has not yet banned Bitcoin, the Danish Financial Supervisory Authority doesn't look on Bitcoin favorably. According to Bloomberg, an "amendment to existing financial legislation" might be written to deal with Bitcoin.