This is how the central bank can ban Russians from buying Bitcoin

Last week, sources from the financial markets industry revealed that Russia’s central bank (Centrobank) wants to ban the country’s residents buying Bitcoin and other cryptocurrencies.

Consequently, one of the currently considered ways to do this is to block certain trade category codes (MCCs), a source told Forbes today.

MMC is a four-digit number used by credit card issuers, such as Visa or Mastercard, to classify retail services when a payment is made. For example, code 5411 is used for payments in stores. Similarly, stock exchanges and other cryptocurrency-related companies have their own MCC — usually 0651.

According to Andrei Mikhaylishin, CEO of crypto payment processor Joys Digital, some Centrobank employees revealed to him that Centrobank is currently considering banning all transactions that have associated MCCs related to crypto. If this proposal comes into force, the regulator will be able to oblige other Russian banks to block such payments.

However, this is just one of the methods currently being considered “among many others”, said another source close to the regulator Forbes.

Not everyone is on board

As CryptoSlate As he reported, Centrobank’s latest initiative against cryptocurrencies was reportedly spurred by potential risks to the country’s financial stability that could pose “an increasing number of crypto transactions”.

During the cryptocurrency regulation working group meeting on Monday, First Deputy President of the Central Bank Olga Skorobogatova also reportedly pointed out that, although the regulator does not plan to draft an additional law banning cryptocurrencies, it still “considers cryptocurrency circulation unacceptable and plans to ban investments in digital assets.”

On the other hand, Centrobank, with its rigid stance on cryptocurrencies, was reportedly in the minority during the meeting. “There is a position of the central bank – and there is a position of all the others,” another source noted.

‘Devastating consequences’

While banning cryptocurrency-related MCCs alone is not something to be really worried about, a central bank initiative can generally have “catastrophic consequences” – depending on the length the regulator is willing to go, says InDeFi SmartBank CEO Sergey Mendeleev.

“Not only do I believe, I know with absolute certainty that such a scenario has already been launched and will be implemented by next spring,” he said. CryptoSlate. “The question is: what will be the scale of this ban?”

According to him, “no one will even notice” such a ban if it is limited to cryptocurrency-related MCCs. On the other hand, the potential introduction of criminal liability can be disastrous – but not for the crypto industry itself.

“This will only worsen Russia’s backwardness in terms of its technological progress. A ban on cryptocurrency would mean the loss of all staff in the area, both entrepreneurs and software developers, as well as financial experts and only talented, “started” people, Mendeleev said.

In addition, a ban on cryptocurrencies could deal a serious blow to the well-being of Russian investors, he explained, adding:

“While Singapore, Zug, Miami, Dubai, San Francisco, New York, Paris and London will continue to receive all the benefits of their openness to cryptocurrencies, Russia will only send its huge human capital to neighboring countries – for free.”

In general, such a ban would also mean a loss of investment from leading international funds, which would have an “extremely negative impact on the country’s economy” and could lead to an “outflow of young and talented people from the country,” Mendeleev added.

“In this case, I suggest going even further and a complete ban on electricity. This will immediately solve all our problems with transportation and tariffs, as well as opposition videos on YouTube “, he concluded. “Let’s just leave the radio in every apartment and read Justice by candlelight bought from the Russian Orthodox Church.”

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