We now know why the recent Bitcoin ban by the Russian government was so sudden and forceful. It seems that a few months ago, both Sberbank and VTB (two of the largest banks in the country) had conducted large-scale research into Bitcoin and blockchain technology, and they concluded that the technology could be used to evade the Russian central bank’s monopoly on currency issuance. This means that the recent Bitcoin ban, which was not widely covered in the media, was conducted as a preemptive measure to prevent Bitcoin from disrupting VTB and Sberbank’s business models.

A few months ago, a popular Russian tech blog (which we are not naming to avoid repercussions) wrote an article titled “Bitcoin is a scam” in which it accuses the CEO’s of Russia’s top banks of being involved in a Bitcoin scheme. In response, the VTB bank’s CEO, Andrei Kostin, wrote an article titled “Why I don’t consider Bitcoin a scam”, in which he explains how a few Bitcoins can turn into a few million in one year. He also explains the reasons why he doesn’t believe the “Bitcoin is a scam” article.

In light of recent events regarding the Bitcoin industry in Russia, which have caused a significant degree of confusion, the CEO of the two largest banks in Russia Sberbank and VTB, Alexander Morozov, have released official statements regarding the case. The statements are mainly focusing on how the mention of Bitcoin in the media was misleading, while the companies had taken no action to end the use of Bitcoin in the country.

word-image-1601 Sberbank and VTB, Russia’s two largest banks, are reluctant to enter the cryptocurrency market in the near future, as their executives believe cryptocurrencies are either too risky or fake money. Herman Gref, head of Sberbank, said cryptocurrencies like bitcoin (BTC), along with the stock market, are probably the riskiest form of investing. In an interview with local TV station NTV on Thursday, Gref said a bank deposit is the best investment option because it carries the least risk despite a low return : A bank deposit is by far the most reliable investment instrument. 100% reliability, but unfortunately not a very high return. Andrey Kostin, CEO of VTB, Russia’s second largest bank, went even further and claimed that cryptocurrencies are counterfeit money. In an interview with Bloomberg on Friday, Kostin said: We don’t like Bitcoin. We think it’s like fake money. Someone is mining somewhere, like in the Middle Ages, and then using them. Kostin said he is confident that digital currencies from central banks will supplant cryptocurrencies. He said the private banks were initially a bit worried about giving all the power over the money to the Bank of Russia. The banks were a little worried that the central bank would take away their business, but I think we’ve found a solution where the customers stay with the banks and the cryptocurrency is controlled and issued by the central bank, he said. It is perhaps not surprising that the aforementioned leaders are not in favor of private digital currencies, given that the Russian government, itself not a big supporter of cryptocurrencies, has large majority stakes in Sberbank and VTB. Yesterday Oliver Hughes – CEO of the private digital bank Tinkoff – said that the Bank of Russia will not allow it to launch cryptocurrency services, despite customer demand.This past week, two of Russia’s largest banks, Sberbank and VTB, jointly issued a statement criticizing Bitcoin. The banks cited Bitcoin’s volatility, its lack of legitimacy, and the fact that it is not a safe means of payment, all of which are true. Moreover, the banks stated that the only thing Bitcoin allows for is tax evasion.. Read more about russian bank stocks and let us know what you think.

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