Russian President Putin Praises and Bashes Cryptocurrencies

Russia’s Vladimir Putin has commented on cryptocurrencies by acknowledging their growth as a legitimate method of payment and warning against “significant” risks.

Speaking at a government meeting in city or Sochi today, Russian president Vladimir Putin warned of “serious risks” accompanying cryptocurrencies. The remarks are notable for Putin becoming highest-profile global leader to comment on cryptocurrencies yet.

In remarks reported by RT, Russia’s Putin underlined the marked growth of cryptocurrencies and their adoption into society.

He stated:

In a number of countries, cryptocurrencies are becoming or have already become a full-fledged means of payment, as well as a means of investment. Cryptocurrencies usage, at the same time, bears significant risks. I’m aware of the [Russian] Central Bank’s position.

Earlier today, the first deputy governor of the Central Bank of Russia Sergei Shvetsov revealed that the Russian government would block access to cryptocurrency exchange websites offering currencies like bitcoin and Ethereum’s ether. The central banker explained the blockade was necessary to protect everyday retail investors from the volatility of cryptocurrencies. “we think that for our citizens, for businesses, the usage of such cryptocurrencies as an investment object carries unreasonably high risks,” Shvetsov said today.

In separate quotes reported by Reuters, Putin is quoted as stating:

The usage of crypto-currencies carries serious risks. I know the central bank’s position on that, we have discussed it several times with the central bank’s governor.

In comments reported by the Financial Times, Putin elaborated on the ‘serious’ risks that he sees inherent in cryptocurrencies.

[F]irst of all, opportunities to launder criminally obtained money, evade taxes and even finance terrorism, as well as, of course, perpetuating fraudulent schemes that obviously may affect ordinary citizens.”

Putin went on to explain that cryptocurrencies “are issued by an unlimited number of anonymous sources”. In any event of “system malfunctions” or volatility, no-one would be held liable, Russian president Putin added in his critique. “Buyers of cryptocurrencies might be ensnared into illegal activity that way. And there is no support for cyptocurrencies.

No Ban. Regulation

Putin’s comments, significant as they are, bore no mention of any crippling ban on cryptocurrencies or initial coin offerings (ICOs), a radical new form of fundraising powered by cryptocurrencies. Unlike the paths taken by China and South Korea, Putin called on Russia’s central bank to create a regulatory framework for the adoption and usage of cryptocurrencies with “legal guarantees for working with innovative financial instruments.”

As things stand, Russia’s central bank could regulate the cryptocurrency industry in 2018. The Central Bank of Russia’s dpuety chairwoman Olga Skorobogatova revealed the authority is working on a framework that will see the taxation cryptocurrencies like bitcoin with the classification of a ‘digital commodity’.

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