As Russia continues to suffer under the weight of plunging gas prices, a currency in free-fall, and crippling economic sanctions, the efforts to keep out competing currencies and keep the black markets down have resulted in several Bitcoin exchange sites based in Russia being shut down as of Tuesday (Jan. 13). The move was pushed by telecommunications regulator Roskomnadzor, which accused Bitcoin of promoting a “shadow economy” that finances terrorism, and gave national weight to a local court order back in September that declared that only the ruble would be acceptable as currency in Russia.
Bitcoin investors and speculators have been aware of the Kremlin’s hostile attitude towards Bitcoin for some time now, and fears have now been stoked that Bitcoin may soon be banned in Russia altogether by this spring. Bitcoin’s value has plunged 32 percent over the last two days partially due to this latest development as well, furthering the slide of the once hot cryptocurrency.
Currently, no law exists in Russia to ban Bitcoin largely to avoid accidentally banning regular forms of business marketing that rely on so-called “alternative” forms of currency, according to the Ministry of Economic Development. The crackdown has thus far only targeted Bitcoin exchanges based in Russia, as well as Russian-language access to global exchanges of the cryptocurrency. Observers are taking this as a formal warning by the Kremlin that the clock is ticking on the cryptocurrency within Russia, even if it doesn’t formally eradicate the currency thanks to foreign websites that Russians still have access to specializing in ruble-bitcoin exchanges. Despite the insistence that this will crack down on the power of the “shadow economy” though, it may inversely create a deeper one as alternative currencies go further underground. With a national currency teetering on the brink of total collapse, citizens will be looking for safer havens for their savings, even if those havens aren’t actually allowed by the Kremlin.