Russia Prohibits Crypto as a Legal Payment (What are the Consequences?)

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Russia has prohibited cryptocurrency as a legal payment. This news is a serious blow to the crypto market, especially concerning the fact that this is one of the biggest markets for digital currencies. The bill "On Digital Financial Assets" was signed by President Vladimir Putin in January 2021 and brought significant restrictions on using cryptocurrencies in Russia. And the bill comes in fall will close the gap through the bill "On Digital Currency". While most of these measures were already put forward by other countries, they have never been implemented in such a strict way. Implementing this bill makes Russia one of the rare countries prohibiting not only buying or selling cryptocurrencies but also their usage as payment for goods and services. So what are the consequences of such drastic measures? 

What's the reason for Russia's prohibition of cryptocurrencies?

The reason behind Russia's prohibition of cryptocurrencies is the same as that of many other countries. The authorities are afraid of losing their control over the finance sector, money laundering and tax avoidance by crypto investors. It's important to remember that the crypto market is still in its infancy and there's no guarantee that it will live up to its promises. The main concern of the Russian government is the fact that an authorized organization can only regulate the circulation of cryptocurrencies. This means that the state can't control them. In such a situation, the only way to stabilize the financial system is to make cryptocurrencies illegal.

Existing limitations on cryptocurrencies

The implementation of this bill brings existing limitations to the level of prohibition. Apart from the restrictions that were implied by the law on cryptocurrencies, there are also limitations concerning their usage. The main restrictions can be summarized as follows: - The use of cryptocurrencies for buying goods or services isn't allowed in Russia. 

- Cryptocurrency exchanges and brokers aren't allowed to operate in the country. 

- Cryptocurrency is not accepted as a payment for goods and services in Russia. 

- Cryptocurrency exchange with the Ruble isn't allowed. 

- Carrying out cryptocurrency operations through credit cards or bank cards is prohibited.

Limitations on Crypto Exchange

The exchange of cryptocurrencies is one of the most important operations in the crypto industry. It allows people to buy new coins and can be considered as the backbone of the crypto market. Investors often utilize this exchange in order to exchange the coins that they think won't be profitable in the future with other coins that have a more promising future. The fact that Russia doesn't allow exchange operations with cryptocurrencies means that coins can't be sold for Rubles. This is a serious blow to the entire crypto market as Russian investors can't cash out. The authorities state that the ban on cryptocurrency exchange operations has been introduced due to the high risks associated with this type of trading.

Russia banned and restricted on exchange operations

The most important restriction on exchange operations with cryptocurrencies concerns the ban on the use of any foreign cryptocurrency exchange. This is the most critical restriction as it means that Russian investors can't sell their coins. The only option they have is to keep them until they mature. This means that investors will have to wait until the coins reach their full potential or until they can be used in another country. With this ban, investors are forced to sell their coins at a lower price compared to the price that's currently present in the market. The ban on exchange operations with cryptocurrencies has also restricted the ability of other countries to invest in Russia. Investors from other countries will have to wait until the coins of interest mature.

Consequences of Russia's prohibition of cryptocurrency

One of Russia's most important consequences of prohibiting cryptocurrency is its negative impact on the global crypto market. Cryptocurrencies can be considered as a kind of financial asset and the volume of their circulation is measured in billions of dollars. The fact that one of the biggest markets has gone against the use of cryptocurrencies can only bring serious consequences for the entire crypto market. The most significant consequence of this prohibition is a decrease in the value of all existing coins. The ban on exchange operations with cryptocurrencies has also affected their price as investors had to sell their coins at a lower price due to the lack of other options. Unfortunately, the prohibition of cryptocurrency in Russia can also lead to the closure of many crypto exchanges that are currently operating in the country.

More control over the finance sector

The main problem with cryptocurrencies lies in the fact that the government can't regulate them. This raises concerns about the financial stability and compliance with the law. Cryptocurrencies can only be controlled by the owners of the coins or by organizations that allow the exchange of cryptocurrencies for cash. This means that the government doesn't have any control over the circulation of digital coins. The government has always been in control of the financial system and the circulation of money. The banks and financial institutions have ensured this. The prohibition of cryptocurrencies has put the government in control of the entire financial system. Now, the state has a full control over the money and can prevent any illegal operations.

Good news to the crypto community

The prohibition of cryptocurrency in Russia is a serious blow to the entire crypto community. However, the government's decision can also be considered as a positive sign. This decision shows that the government is aware of the potential threats posed by cryptocurrencies and is ready to take drastic measures. If other countries follow Russia's suit, regulating the crypto market will be much easier. In such a situation, cryptocurrency exchanges won't be able to operate in different countries. This will make it easier to regulate them and end illegal operations. This can be considered a good omen for those who believe cryptocurrencies have a promising future. The only way to ensure their success is to regulate the market and prevent illegal operations.

Conclusion

The prohibition of cryptocurrency in Russia is a severe blow to the entire crypto community. If other countries follow suit, regulating the crypto market will be much easier. Cryptocurrencies can only succeed if the government controls the financial system and money circulation. This makes it easier to prevent illegal operations and end the threat of money laundering. However, this doesn't mean that cryptocurrencies have no future. All that needs to be done is to regulate their circulation and make them more suitable for everyday use.

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Photo by Egor Filin on Unsplash