The Kremlin has confirmed that Russia will not legalize bitcoin describing it as a threat to the financial system.
According to local media sites, Dmitri Peskov, Russia’s spokesperson, stated that the country was not prepared for it and that there was no cause to do so. Additionally, Peskov stated that legalizing bitcoin would harm the financial system, referring to bitcoin as a quasi-currency. He made no additional comment.
The declaration comes on the heels of El Salvador’s official approval of bitcoin as legal cash on September 7. The launch occurred concurrently with the introduction of the Chivo Wallet, though the scenario appears to be fraught with complications. El Salvador’s government purchased 400 bitcoins to kick-start the country’s economic transition.
Most countries are hesitant to adopt bitcoin as legal cash, owing to the cryptocurrency’s unpredictability. Salary payments with bitcoin may be troublesome, for example, due to the volatility of the currency. This is an issue that El Salvador’s ministers have raised.
Russia’s position on bitcoin is fairly ambiguous. While the country is not wholly opposed to cryptocurrency, it is making moves to regulate the sector. On the good side, a Russian court has ordered Sberbank to lift crypto trading prohibitions.
Russia is purportedly developing a mechanism to detect crypto-related criminal activity in addition to establishing its own CBDC, the digital ruble. In June, the Bank of Russia announced a forthcoming trial of the digital ruble.
What impact will the adoption of bitcoin as legal tender have?
El Salvador’s plan to legalize bitcoin sent shockwaves through the cryptocurrency community when it was originally revealed. Many were unsure of how it would be implemented or if it would be mandatory.
Both within and outside the country, criticism has been leveled. According to reports, citizens are protesting in the streets, while the opposing party makes its case. The dispute is mostly over bitcoin’s volatility and potential for money laundering.
As a result, the International Monetary Fund (IMF) noted that the decision may raise macroeconomic and legal difficulties. International support appears to be limited in general, with the World Bank also declining to aid El Salvador. In any event, El Salvador’s move will be an interesting experiment to watch. Whatever the conclusion, analysts will gain a better understanding of how bitcoin operates on a much wider scale.
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