Report: Russia's icy stance on bitcoin thaws

The Wall Street Journal reports today that Russia’s longstanding hostility to bitcoin may be easing. The paper reports that the Bank of Russia has altered its policies, and will no longer restrict the use of virtual currencies. Earlier this year, the Russian Prosecutor General’s Office declared bitcoin to be an illegal form of currency, and the central bank promised a crackdown on cryptocurrency use.

The WSJ quoted statements made by Bank of Russia’s first deputy chairman Georgy Luntovsky, who said his institution was gathering information about cryptocurrencies. “At this stage we need to watch how the situation develops with these kinds of currencies,” Luntovsky said. “These instruments should not be rejected.”

The move comes on the heels of a report last week from the Kuwait Financial Centre suggesting that bitcoin could be a viable alternative to U.S. dollars for oil trade. With Russia openly partnering with decidedly non-U.S. allies like Iran, the decentralized nature of bitcoin could remove many significant currency barriers for the Russian oil trade, as well as providing an alternative method of transaction outside of the Western-dominated international banking system.

Bitcoin has been villainized by Russian authorities largely due to that country’s understandable preoccupation with organized crime, weapons and drug trafficking, and terrorism. With global venture capital pouring into the bitcoin ecosystem, however, and Russia’s trading partners like China struggling to contain the phenomenon with banking controls, it appears that Russia’s central bank has been forced to reconsider its position.

As Luntovsky noted: ‪”It turns out that criminals start to use everything new.”