On Oct 14, 2020, news emerged that Russia telecom regulator Roskomnadzor had blocked the P2P Bitcoin trading platform LocalBitcoins.
Users of the over-the-counter trading website had started complaining about problems with accessing LocalBitcoins as early as late September.
Roskomnadzor has now come out to explain that the website LocalBitcoins.net — a mirror of the .com site focused on serving customers in Russia, was added in the unified register of prohibited resources in the country.
According to the regulator, the reason for the ban was that the trading platform could be disseminating illegal information to the public. Traders on LocalBitcoins.net now find themselves with a blank page after logging on to the site’s portal.
The trading platform has been a target of regulators in the past as the Russian government’s complicated relationship with Bitcoin carries on. Back in 2018, financial watchdogs added LocalBitcoins to the register of prohibited resources.
Other crypto P2P platforms have faced similar bans in the past, with the BestChange website and NinjaTrader domain also blocked by regulators.
BTC Trading In Russia Remains Unaffected
Russians seem to have embraced the use of cryptocurrencies like Bitcoin, but their government is still unwilling to allow the free use of this asset class. Back in July 2020, Russia’s President Vladimir Putin signed a law banning residents from making payments using crypto.
This law that comes into effect on Jan 1, 2021, recognizes crypto as an investment but prohibits its use for purchasing goods and services. Furthermore, the possession of crypto, its acquisition and transfer by legal means are allowed only if declared, which goes against the core value of anonymity.
Despite the recent efforts to stifle the use of BTC in the country, crypto trading seems to have remained unaffected. Following the ban by Roskomnadzor, Russian traders have remained quite active on LocalBitcoins by accessing the portal via a VPN that obscures their actual location.
Mikhail Lunev, CEO of the Bitzlato P2P platform, reiterates that the ban on LocalBitcoins will likely have little effect on user behaviour.
“A couple of months ago we were also blocked by Roskomnadzor. We had to move to the mirrors and urgently “fix” the site, but we did not feel the outflow of users. Clients continued to trade via the BTC banker telegram bot,” Lunev explained.
Russia’s Tough Stance on BTC could be Driving Adoption
Russian authorities have long looked at BTC and other digital assets with a lot of scepticism. In an earlier draft law, the country’s Parliament had proposed a total ban on Bitcoin. Regulators went as far as to contemplate imposing fines of up to $7,000 or seven years imprisonment for anyone buying the asset.
The government’s hostility toward crypto has created a thriving underground and clandestine Bitcoin market, most likely through peer to peer transactions.
Moreover, top exchanges such as Huobi Global and Binance have gone on to venture into the country’s crypto market despite the regulatory tension in Russia.