“Liability Must Be Placed Upon Illicit Use Cases of Cryptocurrencies”, Opines Bank of Russia

Bank of Russia has been insisting on imposing liability on the persons and entities using digital currencies for illicit purposes. The bank believes that no one should be spared and held accountable if the laws have been violated.

Bank of Russia believes that there are some uses of digital currencies which, by all intents and purposes, should be deemed to be “illegal”. However, only a very few uses of digital currencies are subject to regulation in the Russian Federation. While most of the uses are still unregulated and some of them can presumably be considered as “illicit” or “illegal” uses.

In recent times though a law namely “Digital Financial Assets” was introduced. But again there were some reservations of Bank of Russia with regard to the law. Bank of Russia suggested that the law is not comprehensive and does not deal with every aspect of cryptocurrencies’ usage. However, in disregard of the observations, the law was duly implemented at the beginning of 2021 and continues to be in force.

The issue of the Bank of Russia with regard to crypto is related to the usage of crypto for acquiring services and goods. Bank of Russia has been consistently maintaining its stance that Bitcoins or any other known cryptocurrency must not be entertained as payment settlement. The bank believes that under the Digital Finance Assets law, payments for services and goods are barred. If anyone wants to settle payment or acquire services, then it is a must that the payment should be made in national currency.

Bank of Russia has noted that still there have been settlements of payments against digital currencies. However, such a practice is illegal under the law on the subject. In view of this, the Bank of Russia has proposed that liability should be placed upon persons/entities using digital currencies for payments. The liability would also be imposed upon those accepting digital currency payments in Russia as well.

The bank wants that liability in the form of fines and imprisonment should be levied. No one should be spared and must be held accountable for their illegal use of cryptocurrencies in the country.

The bank believes when malicious actors would know that they’d be held accountable, they would think twice before committing any illicit activity. The imposition of liability would therefore provide deterrence against illegal use of cryptocurrencies.

It has been suggested by the bank that Russia would need to amend various laws for incorporating liabilities. In addition, regulatory oversight would have to be made more precise so that violators can be identified there and then.

However, the recommendation of the Bank of Russia has been duly noted by the Russian Government. No decision as such has been taken on Bank of Russia’s recommendations so far.