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27 Dec, 2014 10:35

Yes to bitcoin! Russian ministry says quasi-money ban may endanger banks, retailers

Yes to bitcoin! Russian ministry says quasi-money ban may endanger banks, retailers

Russia's Ministry of Economic Development has reacted negatively to the bill to ban cash equivalents, including electronic money, such as bitcoins. It said the proposed ban could hit major telecom operators, retailers and banks hard.

The Ministry of Finance has developed a draft law on the introduction of responsibility for handling cash equivalents after President Vladimir Putin's request in March. In the law "On the Central Bank" the Ministry is proposing to define quasi-money as monetary units and objects of property rights not provided for by the law. It would include those in electronic form, used as a means of payment and (or) exchange.

READ MORE: Bitcoin pioneer jailed for 2 yrs over Silk Road ties

According to the Ministry of Economic Development, the proposed definition lacks precision. Basically, any cash equivalents, such as gift cards and certificates, could be ambiguous, the ministry said. As a result, Russia's leading retailers, telecom operators and banks would face serious difficulties with their marketing campaigns, putting at risk development of loyalty programs to attract new customers.

The ban, for instance, would hit Sberbank's "Thank you" program hard. Millions of mobile operator subscribers won't be able to collect their bonus points either.

The project’s players have spoken strongly against the bill, including Russia's mobile operator giants MTS and Megafon. According to the RBK news agency, the National Payments Council said the Finance Ministry's quasi-money definition will outlaw bonuses even those of consumers who prefer to pay with plastic cards. As a result, the move "could throw [Russia's] payment service market a few years into the past, leading to a fall in the number of non-cash payments for goods and services."

Reuters / Mark Blinch

WebMoney Development Director Peter Darakhvelidze told RBK that the Ministry of Economic Development was right to highlight the risks in the bill. Given that Russia may soon suffer from restriction of access to the global financial system, in particular to the payment system SWIFT, the government should pay more attention to financial innovations instead of trying to ban them, he added.

"The proposed draft regulation act doesn’t solve any tasks assigned, but only serves to create legal barriers to the implementation of marketing programs of businesses and business development in general,"
Tass quoted the Ministry of Economic Development as saying.

Adding that many of the draft's provisions introduce excessive administrative and other restrictions and obligations, contributing to unreasonable costs, the ministry demanded that the bill's authors rework the draft.

According to regulations, the Ministry of Finance can either re-submit the revised bill to the Ministry of Economic Development, or submit it to the government without changes, enclosing a table of differences on the project.