Russia is going against Bitcoin too - October 15, 2017

Russia is going against Bitcoin too

Russia turned against cryptocurrencies this week with a surprise step. Some weeks ago, they were planning to legalize the market, but now the central bank decided to block sites selling Bitcoin, Ethereum and others. More and more countries are going against cryptocurrencies.

Russian president Vladimir Putin said that he believes that cryptocurrencies are risky and they are used for crimes like money laundry, wrote Reuters on Tuesday. In the meanwhile, leader of local central bank said that they cannot allow people to invest in such a “dubious” currencies. “We cannot stand apart. We cannot give direct and easy access to such dubious instruments for retail (investors),” said Seirgei Shvetsov according to the journal.

Ban in Russia

The central bank also announced that they would block sites selling cryptocurrencies such as Bitcoin, Ethereum and others. They firmly believe that cryptocurrencies hold too big a risk for investors to face, even if they sometimes have big returns.

This is a huge turnaround for the country which was planning to legalize the market. Just weeks ago, minister of finance said that they must accept cryptocurrencies exist, and banning them makes no sense. Instead, the minister planned to regulate them properly.

Russia is not alone

Russia is not the only one turning cold on virtual currencies. A month ago, China banned the biggest Bitcoin market, BTC China from operating. The reasons were mainly the same as they were for Russia.

It’s important to see, though, that China was a huge market for Bitcoin: 23% of total market was made up by them. Many Chinese people bought Bitcoin to move their money out from the communist country. No wonder the Chinese ban made prices fall 30% in days. The Russian news only made the prices fell 5%, but then both cryptocurrencies recovered. Still, it’s easy to see that how volatile Bitcoin can be.

What about the others?

The problem is not only with Bitcoin and other big ones. Just days ago, South Korea banned initial coin offerings (ICOs). The reasoning was, according to Bloomberg, that “ICOs have been used to raise more than $2 billion this year, with some startups seeing it as a cheaper and faster alternative to venture capital for raising money. But the lack of oversight has attracted criminals, with some estimates showing about 10 percent of all ICO funds being stolen by thieves.” Therefore, South Korea decided it was best to ban them altogether.

In the meanwhile, there are some "coins" that may be used for masking pyramid-like schemes. According to some authorities, OneCoin may be one of them. Germany and Italy already banned it some months ago.

Generally speaking, authorities are warning against even legit cryptocurrencies for being too volatile. Several domestic and even the European Central Bank issued warnings against buying them.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.