Russia to ban cryptocurrency exchanges

Sergei Shvetsov, First Deputy Chairman of the Central Bank of Russia, said he plans to ban websites that offer cryptocurrencies inside the country.

These websites — referred to as cryptocurrency exchange platforms — allow users to buy and sell cryptocurrency by exchanging them to regular fiat currency, such as Russian rubles, US dollars, Euros, and other.

Money laundering, market speculation, price instability

Just like most countries around the world, Russia never looked favorably on cryptocurrencies and had several attempts to block various Bitcoin exchange platforms back in 2015, later overturned by local courts.

Financial officials often decried the lack of any cryptocurrency regulations that have allowed miscreants access to a method of laundering criminal proceeds or bypassing taxation laws.

"We cannot stand aside. We cannot give direct and easy access to such dubious instruments for investors," Shvetsov said about cryptocurrencies in general.

He also likened the entire cryptocurrency market to a high-risk pyramid scheme, citing Bitcoin's huge price spike from the past year that has fueled market price speculation.

"Even the owners of large Bitcoin exchanges say there is not much money in the system. This tool is quite low-liquid, it's almost impossible to get out of it," Shvetsov said.

Nonetheless, Shvetsov said he perfectly understands why people are attracted to cryptocurrencies, mainly due to the high return in comparison to the low effort put into generating profits.

All in all, speculation, instability, the threat of money laundering, and lack of cash assets is usually a bad omen for investors, and especially regulators. This is why Svetsov said he's planning to ban cryptocurrency exchanges somewhere in the future.

Regulation expected sometime next year

If Shvetsov's plan goes through, this means that the only way Russians could earn Bitcoin and other cryptocurrencies is to mine it themselves, and then spend it at services that accept Bitcoin payments, but without the possibility of ever exchanging it into fiat currency — or at least not in the country.

Shvetsov made these statements earlier today at the Russian Derivatives Market 12th International Forum, according to Interfax, a Russian news agency. He didn't provide a timeline for implementing the ban on cryptocurrency exchanges.

Back in August, Russia's Deputy Finance Minister Alexei Moiseev said the state would most likely prepare legislation to regulate Bitcoin somewhere in 2018.

In a report released today by Russian cyber-security firm Group-IB, cryptocurrency exchanges, banks, and power stations were deemed the top three most likely targets for hackers in the coming future.