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Bitcoin Can Wreak Havoc by ‘Ruining’ Governments: Senior Russian Official

Last Updated March 4, 2021 2:33 PM
Samantha Chang
Last Updated March 4, 2021 2:33 PM

By CCN.com: A top official with Russia’s State Duma (the Russian Parliament) warned that bitcoin has the capacity to ruin governments because it could facilitate the offshoring of massive amounts of money.

Nikolay Arefyev, the deputy chairman of the State Duma committee on economic policy, sounded the alarm at a May 20 press conference, Rambler  reported.

Official: We don’t want capital exodus from Russia

Specifically, Arefyev warned that cryptocurrencies could lead to Russia’s collapse because it could trigger a mass-withdrawal of capital to offshore accounts.

“If cryptocurrency worked, we would be completely ruined today because all financial flows would be taken out of Russia. And Russia would end. Because cryptocurrencies were created to ensure that the state does not control the flow of capital.”

Arefyev noted that since 1994, about 210 trillion rubles (or $3.25 billion) have been withdrawn from Russia. That’s equivalent to half of Russia’s annual budget.

Arefyev: Purpose of bitcoin is tax evasion

Arefyev claims bitcoin was created to hide large amounts of money in secret offshore accounts in order to enable wealthy individuals and entities to avoid paying taxes.

Therefore, Nikolay Arefyev says it’s useless to integrate bitcoin with Russia’s current financial system because it’s too speculative and shady. Instead, he suggested that a better approach would be to ban cryptocurrencies altogether.

This is something that Democratic Congressman Brad Sherman proposed for the United States.

“I look for colleagues to join with me in introducing a bill to outlaw cryptocurrency purchases by Americans, so that we nip this in the bud.”

“An awful lot of our international power comes from the fact that the U.S. dollar is the standard unit of international finance and transactions. It is the announced purpose of the supporters of cryptocurrency to take that power away from us.”

Vladimir Putin: Bitcoin is a magnet for criminals

The cryptocurrency industry is not regulated in Russia. As CCN.com reported in February, Russian President Vladimir Putin — a bitcoin skeptic — ordered the government to adopt crypto regulations by July 1, 2019.

The goal of the legislation is to promote the digital economy in Russia, which is struggling financially amid crippling U.S. economic sanctions. However, those rules have been delayed. This is the second such postponement in two years.

Like the Duma’s Nikolay Arefyev, Putin has expressed skepticism about bitcoin amid concerns over money-laundering and tax evasion.

In 2017, Putin warned Russians about the risks posed by virtual currencies. Specifically, he said bitcoin attracts criminals (video below).

“[The risks include] opportunities to launder funds acquired through criminal activities, tax evasion, even terrorism financing, as well as the spread of fraud schemes.”

Russia’s central bank echoed Putin’s anti-crypto sentiments, and called bitcoin a pyramid scheme.

Duma official: Russia won’t use crypto for 30 years

In January 2019, a Duma official said cryptocurrencies will probably not be implemented in Russia for at least the next 30 years.

Elina Sidorenko is the chairwoman of an interdepartmental working group of the State Duma for managing risks of cryptocurrency turnover. She made the remarks in response to rumors that Russia was planning to buy $10 billion in bitcoin during the first quarter of 2019 to mitigate the impact of U.S. sanctions.

Elina Sidorenko crypto russian state duma
Elina Sidorenko of the Duma says Russia probably won’t use crypto for another 30 years. | Source: YouTube/MGIMO

As CCN.com reported, Sidorenko shot down the rumors as complete rubbish. Moreover, Sidorenko said it is unlikely that crypto will be implemented in Russia for at least another three decades.

“The Russian Federation is simply not ready to combine its traditional financial system with cryptocurrencies. And to say that this idea can be implemented in Russia for at least the next 30 years is unlikely.”