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Industry experts disclose a potential strategy for the Bank of Russia to restrict crypto.

3 min reading

Crypto restrictions imposed by the Bank of Russia via MCC will improbable to impact exchanges that have been working unlawfully until now.

A local industry official has revealed a possible mechanism for the Bank of Russia to restrict crypto transactions, despite the continuous ambiguity concerning the future of cryptocurrencies in Russia.

According to Forbes Russia, Andrey Mikhaylishin, CEO of local crypto payment firm Joys, the Russian central bank is currently evaluating multiple possible approaches to make its crypto ban feasible.

Blocking debit card payments to crypto exchanges or wallets using merchant category codes (MCC) is one of the likely restriction ways, as per Mikhaylishin. According to the report, the executive discovered the blocking method through Bank of Russia staff.

MCC codes are four-digit numbers that credit card processors like Visa and Mastercard utilise to define a merchant's main business operations. The 6051 MCC code, for example, is used to identify crypto transactions, whereas the 5411 MCC code is used to identify payments at grocery stores.The Bank of Russia, according to the report, could compel local banks to just block transactions using the 6051 MCC code.

Although the proposed scheme seems to be still under consideration in Russia, some industry experts have queried its efficacy.

According to Maria Stankevich, a member of the Russian Committee on Blockchain Technologies and Cryptoeconomics, possible MCC-based limitations would drive transparent corporations out from the country while leaving unlawful crypto exchanges:

“I am 100% sure if they prohibit transfers to cryptocurrency with the right MCC, then honest exchanges will leave the market in the first place. There will remain grey crypto exchanges, which will do so-called miscoding, using other codes for transactions.”

Stankevich believes that miscoding fines at providers such as Visa are inadequate to put unlawful crypto trading to an end.

As reported earlier, Russia has various grey crypto firms, with a minimum of 50 of them based in Moscow City, the country's financial district.

The official also showed enthusiasm about the crypto sector in Russia, noting that the Bank of Russia is the country's only regulator who opposes crypto adoption:

“We have always known that the central bank is against crypto and wants it to be banned, but I still don’t think that this will be the way for Russia because the central bank is in the minority there.”

“I personally know many high-ranking officials in Russia that understand the importance of crypto,” Stankevich said.

The statement follows after Bank of Russia governor Elvira Nabiullina stated that the bank intends to restrict the use of crypto in the local financial system. Russians will only be permitted to invest in cryptocurrencies like Bitcoin (BTC) through international firms, according to another bank official.

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