Monday, June 26, 2017

Bank of Russia warns of Bitcoin money-laundering potential

On Wednesday, Russia's central Bank issued a statement warned its member financial institutions of Bitcoin's potential to be used illegally.

"The Bank of Russia warns both private individuals and legal entities, lending institutions and non-lending financial institutions first and foremost, against the use of 'virtual currency', that is, exchanging this for goods (work, services) or legal tenders such as rubles or foreign currency," the central bank said, according to Ural Business Consulting. "According to Article 27 of the Federal Act on the Central Bank of the Russian Federation, it is illegal to issue any quasi-money on the territory of the Russian Federation."

Igor Nesterovitch, the Bank of Russia's transactions director, said the inflating value of Bitcoin has the potential to result in a sudden burst in value, similar to that seen in financial pyramid schemes.

"Bitcoins are a virtual currency invented by a person or group of people who use an assumed name of Satoshi Nakamoto," Nesterovitch said, Ural Business Consulting reports. "The growing exchange rate and the money-laundering potential of this 'currency' have aroused a lot of interest lately. People who are considering investing in Bitcoins must be aware of very high risks, as this financial instrument has no economic foundation whatsoever."