Russia's frigid stance on Bitcoin may be thawing

In February, Russia’s General Prosecutor’s Office released a statement that seemed to plainly state that using Bitcoin was illegal in the country. The statement seemingly left no gray area around Bitcoin’s status in Russian law.

The anonymous payment systems and crypto-currencies, including bitcoin – which is the most popular of them – are monetary surrogates. As such, their use by private citizens or legal entities is not allowed.”

Today it was revealed that stance is either softening, or that there is some internal disagreement about Bitcoin among Russian authorities. The Bank of Russia released a formal response to a citizen inquiry about the apparent Bitcoin ban, and the tone was considerably less harsh than the General Prosecutor’s statement.

General Prosecutor’s Office of the Russian Federation, February 6, 2014 had a meeting of the expert group under the Interagency Working Group on combating crimes in the sphere of the economy devoted to the use of anonymous payment systems and cryptocurrencies on the territory of Russia.The work of this group was attended by representatives of the Bank of Russia. One of the goals of the event was to develop a unified approach to the determination of the legal status of cryptocurrencies, also it was discussed future directions for the legal regulation of the sphere of cryptocurrencies’ using and development of measures to prevent the violation of property rights of citizens and organizations in this field.

Thus the position of the meeting was not to prohibit all operations related to cryptocurrencies, the main goal was the preparation and realization of a complex of measures to prevent the use of cryptocurrencies in illegal operations, including those related to the legalization (laundering) of proceeds from crime, as well as improving the regulatory framework to protect the rights of citizens and organizations using cryptocurrencies.

According to a CoinDesk analysis, the February statement may have been misinterpreted by most observers, and did not “ban” Bitcoin so much as serve as a warning. Citing BTC-e’s experience with Russian regulation, if offered this perspective on how “procedures work” in Russia.

1. [Central bank] makes warning, sometimes in very strict words due lack of understanding the issue.
2. After the warning, bunch of requests of clarifications from the users of that country goes to the authority.
3. Authority from some number of requests start do homework better and research the issue more carefully.
4. Authority adjust previously made warning with clarification what exactly allowed and what is not.

If Russia truly is thawing its icy attitude on Bitcoin, it would open up a major market, and might encourage other Bitcoin-skeptical countries, such as China, to tone down their rhetoric and adopt more sensible long-term virtual currency policies.