Bitcoin Briefly Flash-Crashes On Russia 'Ban' Headlines

Tyler Durden's picture

After weeks of uncertainty surrounding Russia's plans for cryptocurrencies, local news outlet RBC reports overnight that Bank of Russia is working with the country’s general prosecutor to block all exchanges offering Russians the opportunity to buy and sell cryptocurrency.

As CoinTelegraph reports, first deputy of the central bank, Sergey Shvetsov, said during an international finance forum in Moscow:

“It’s obvious that when a pyramid (scheme) grows, interest in this pyramid hots up with the high rate of return."

 

Echoing previous comments, Shvetsov added that the pyramid description is a result of “eyeing Bitcoin’s price dynamics over the past two years.”

The move is the most sweeping yet from Russian authorities regarding cryptocurrency access for citizens, and echoes the less coordinated bans of various industry resources common until last year. The debate as to how to handle cryptocurrency has raged throughout 2017 in Russia, with various high-profile entities giving conflicting views as to what the future will hold in terms of regulation.

This regulation is ostensibly due to go public by the end of the year.

 

In the meantime, not just private investors, but also the business sector faces “too high a risk” using cryptocurrency, Shvetsov said.

 

“We cannot stand apart. We cannot give direct and easy access to such dubious instruments for retail (investors),”

 

Financial instruments based on cryptocurrency are “impossible to support,” he continued, adding measures would be taken to “restrict” the ability of the Russian domestic market to interact with them.

The reaction was varied. As Coinivore notes, Bitcoin prices flash-crashed on CoinDesk...

Notably, this would be the third time that the country has issued some form of ban against Bitcoin and digital currency in the past several years.

Russia’s Central Bank just approved its first exchange “Voskhod,” so this is likely a temporary ban until regulations are set which will likely ban normal Russian citizens from investing into cryptocurrency due to high volatility.

However, Bitcoin is now higher on the day (bouncing back as it did from China's ban), and as BitStamp data shows, not every exchange shows the flash-crash...

It seems the market for Bitcoin is quick to realize that the dcecentralized nature of the cryptocurrency framework means that whiole short-term demand from localized exchange closures may hobble prices, it does not affect the overall value of the independent currency (just as many have found out since China blocked exchanges).

We would not expect this to be the last nation to attempt to 'ban' Bitcoin. As Cybersecurity expert John McAfee warns, cryptocurrencies may encompass the sum of all fears for governments the world over.

With no centralized exchange to control or influence, national authorities around the world will find it increasingly difficult to determine a given citizen's income and thus their income tax owed, undermining a critical source of government revenue.

 

Our income taxes are the greatest source of revenue, but if everybody’s using Bitcoin, the government doesn’t know what your income is. They can’t tax it, and if you choose to say I didn’t have anything, they cannot prove otherwise,” McAfee told CalvinAyre.com.

 

“It will eventually frighten every nation state, but it doesn’t matter what they do, there’s no way you can create a law or to legislate something that will stop Bitcoin or any cryptocurrency because technically, you cannot,” he added.

The often outspoken and eccentric McAfee did highlight the need for some regulation, however, preaching caution over the latest trend of government-sponsored Initial Coin Offerings (ICOs).

“China is right about one thing, the ICOs, the initial coin offerings, there are lots of scams, lots of people who are fraudulently taking money from other people, so that’s got to stop. But I don’t think governments can stop it. We as users and the bitcoin community have to be self-regulated,” McAfee said.

 

“The fear is in the fear of governments and central banks, like JPMorgan, which is America’s largest bank,” he said. “The CEO is so concerned that he acted like a madman and called Bitcoin a fraud, said someone is going to get killed eventually. It’s like, what are you talking about? It’s nonsense.”

McAfee concluded:

"So banks and governments are the ones that have the fear. Well they should have some fear. They have taken control and power away from their citizens for hundreds of years. It’s time that we, as citizens, took that power back."

 

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pc_babe's picture

Government wags the dog's tail.

StackShinyStuff's picture

The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.

UndergroundPost's picture

Clepto-currencies are "a pyramid scheme"? Who woulda thought

YUNOSELL's picture

Russia and China catching on that it is another hidden 'financial innovation' wealth extraction plan by the west to redistribute wealth from rising to ruling powers

 

Gold and Silver tried tested and true stores of true wealth energy for over 5,000 years

VD's picture

NSAcoins, for the crypt0-muppetz to believe in "co(i)ns" to0 good to be true, on a ledger backed by......very basic maths as cooked up by NSA.

MagicHandPuppet's picture

Nothing to fear!

Satoshi Nakamoto programmed infinite intrinsic value into these things.  TO THE MOON!

VD's picture

"Satoshi's" Cat

 

Free "Satoshi"

YUNOSELL's picture

Lol, Like Schrodinger's Cat -- cryptocurrency can be both a stable medium of exchange and a speculative financial instrument for making profits!!

VD's picture

itz a scam, a poisonous scam, in a box, dead or alive dont make a diff, in the impending end.

BaBaBouy's picture

Just wait until Thump starts Tweeting about Bitcoinz ...

Take Da MOney And Runnnnnnnnnn . . .

Silver Swan's picture

When governments lose control of the money supply, consumption taxes will be the preferred method of revenue.

 

...or confiscation

Balkan's picture

Exactly. Consumption and possession taxes.

The only but significant problem is that the income may just burn out with this 'investment".

Buckaroo Banzai's picture

"Our income taxes are the greatest source of revenue, but if everybody’s using Bitcoin, the government doesn’t know what your income is. They can’t tax it, and if you choose to say I didn’t have anything, they cannot prove otherwise,” McAfee told CalvinAyre.com."

Uh, no. Government's "greatest source of revenue" is the ability to print money. Or, technically, borrow it into existence, after the Jews get their cut of course. Income taxes are just a political weapon and enforcement tool.

BlindMonkey's picture

That can only be taken so far.  Who would rather have BTC than Venezuelan Pesos?

tmosley's picture

>Government's "greatest source of revenue" is the ability to print money.

In theory, but I did the calculation a while back and since 2008 they only printed about 2% of the amount they took in in taxes.

But that is just the publicly disclosed numbers.  

tmosley's picture

Peanutz don't like facts that go against their narrative.

malek's picture

How come you give Sergey Shvetsov a pass on calling tulipcoins "a pyramid scheme?"

Oh, and for laughs and giggles show us your calculation how "since 2008 they [government] ONLY printed about 2% of the amount they took in in taxes."
You know with a ~40% federal budget shortfall pretty much every year since.

tmosley's picture

>How come you give Sergey Shvetsov a pass on calling tulipcoins "a pyramid scheme?"

When did I do that?

>You know with a ~40% federal budget shortfall pretty much every year since.

There's this funny thing called a "bond" that allows you to spend more than you have without printing money.

As for the calculation, I don't really feel like it, nor do I have the time.You can do it yourself though. All the data is available. Just take the Fed's balance sheet expansion since 2008 divided by taxes collected since 2008.

malek's picture

So how is emitting bonds, without the intent to ever pay them back, different from printing money?

And what the fuck has "the Fed's balance sheet expansion" to do with government revenues??

Balkan's picture

It's not the Goverments who print money. It's the Central Banks. And the CBs are not subordinated to Goverments, they borrow them money.

HungryPorkChop's picture

Yeah, but a lot of pundits are questioning how much money the various central banks really created around the globe versus numbers released to the PuBlIc.  Plus how much of this money quietly found its way into asset classes like Stawk' Markets and ReAl EsTaTe.  So if we want to discuss ponzi or markets that have been pump'd up..?  HOwever, I somehow find it hard to believe the govt's or their banks are pumpin' the crypto's.  Doesn't mean they wouldn't try and make some money in this tiny marketplace but doubt they are responsible for much of the upwards trending pricing.

shuckster's picture

Income taxes are just a political weapon and enforcement tool

Well said sir!

tmosley's picture

Who the fuck ever said the price of crypto was stable?

The price of crypto is volatile with a powerful upward bias. Like real estate in the American west and midwest, but with the settlement and taming of such happening about ten times faster.

3000 acre plots can still be had for just $5000.

Mister Ponzi's picture

Why should I care what your government does? 

Badsamm's picture

I'm making money. Tell me it's not real

MagicHandPuppet's picture

That's awesome. When did you sell to collect all of that money you made?

tmosley's picture

Except that one time that the Spaniards doubled the supply within a few years.

Cheap energy will duplicate that effect. Asteroid mining will duplicate it again.

But keep stackin'! Maybe you can build a house out of solid gold!

To Infinity And Beyond's picture

Yeah, because asteroid minimg is so cheap. Gold will be pretty much free.

tmosley's picture

You have no idea how cheap it is going to be. Fully automated supply lines built using local materials make for products that are essentially free. Like internet content.

BlindMonkey's picture

I find it hard to speculate on the future value of a production method that is currently impossible.  

 

On that note, it is time to dig out "Ice Pirates" and have a good laugh. 

tmosley's picture

>I find it hard to speculate on the future value of a production method that is currently impossible.  

You sound like the kind of guy who would go all in on buggy whip manufacturers circa 1915.

in4mayshun's picture

You sound like the kind of guy who would go all in on tulips circa 1635.

tmosley's picture

Lots of money to be made there. The prices disclosed were not for individual bulbs, but entire breeding stocks. They were bred and then exported to the rest of Europe and the Dutch are to this day world famous for their tulips.

But of course, crypto is so much more than a species of flower.

Ink Pusher's picture

LOL Tell that to the big pharma kings and the soldiers guarding the poppy fields for them in Afghanistan.

Justin Case's picture

In the video presentation below (((( IT HAS BEEN REMOVED ))), NASA engineer Kelly Smith explains about many of the risks and pitfalls surrounding the new Orion Deep Space Mission to the planet Mars.

Surprisingly, chief among Kelly’s concerns is whether or not his spacecraft can successfully pass through the perilous Van Allen Radiation Belts. Such is the prospective danger in fact, that NASA will have to send a dumbie craft first in order to ‘test out’ what the potential radiation effects will be on future human crews, as well as on the ship’s delicate sensors and equipment.

Hold on. Why the guessing game by NASA? Why don’t they just use the same 1969 technology they are said to have used on the first Apollo moon missions?

SuperPerformance72 explains, “This video released by NASA about the upcoming Orion space exploration craft, shows a NASA scientist admitting that they still haven’t worked out how to properly shield the spacecraft from the radiation emitted from the Van Allen belts.”

This is the ultimate conspiracy, as it brings together two huge issues – the viability of the Apollo Moon Landings, as well as dreams of a human colony on Mars. This latest admission by NASA places both of these in jeopardy.

The Apollo mission was a Stanley Kubrick film made in a studio that was built at NASA. This studio has now been taken down and it was announced a few years ago, that all the videos of the mission have been accidently erased.

I guess someone left them in the office on the desk and there were no labels on them. So NASA not having any extra Beta tapes, someone used them, because they didn't break the little tabs at the back to prevent recording over them. Oh well so much for history, now a mystery.

Creepy_Azz_Crackaah's picture

ICBMs and jet airplanes are fake as well.  Thanks for the revealing the highly valuable "information."  Don't forget to take your meds.

Gaius Frakkin' Baltar's picture

So is the horse, but who still uses it for anything practical?

Txpl9421's picture

Yeah, until Roosevelt made owning gold a crime.

Your argument is old, tired, and full of inaccuracies.

Uncoy's picture

I think you are onto something here. The internet and more specifically Wikileaks was originally used as a weapon against non-Western states (colour revolutions, exposés). When the internet turned on its creators/masters, gradually the screws are being tightened on the internet.

Same deal with cryptocurrencies. Get the Chinese and the Russians to jump in with both feet - then take control via legislation or market manipulation or malicious code (happened many, many times before with both routers and operating systems). Leave the Russians and Chinese penniless. There's not much upside here for developing markets who don't have such a developed or sophisticated financial caste.

Financial criminals and parasites: the US and Britain certainly are world leaders with an honourable mention for Germany, Switzerland, France and Israel. Financial instruments are not the field of battle which either the Chinese or Russians should choose.

Uncoy's picture

I think you are onto something here. The internet and more specifically Wikileaks was originally used as a weapon against non-Western states (colour revolutions, exposés). When the internet turned on its creators/masters, gradually the screws are being tightened on the internet.

Same deal with cryptocurrencies. Get the Chinese and the Russians to jump in with both feet - then take control via legislation or market manipulation or malicious code (happened many, many times before with both routers and operating systems). Leave the Russians and Chinese penniless. There's not much upside here for developing markets who don't have such a developed or sophisticated financial caste.

Financial criminals and parasites: the US and Britain certainly are world leaders with an honourable mention for Germany, Switzerland, France and Israel. Financial instruments are not the field of battle which either the Chinese or Russians should choose.

ZorroHedge's picture

Gold went from 2000 $ to 1200 $, silver from 50 $ to 17 $. I am jealous by the way you stored your wealth.

tmosley's picture

Suck that central banker cock, goyslave!

Suck it long, and suck it HARD!

dark pools of soros's picture

so it crashed to what, $4200 or something? How's those gold surges?

YUNOSELL's picture

We all know why gold price is low -- buying gold is a supreme declaration that the people believe the system isn't working, that fiat currency is being abused, and inflation is on its way -- can't have that now!

Global Douche's picture

Yet, it will happen. Central Bank$ are already buying Au very steathily.

If one is after some Au/Ag, NOW is a fantastic time to stack some. Risks are very low, especially in silver as price of production vs spot price is so outta whack. Also, the lack of action with JPM over the last several weeks is telling it's own story. Not to say the price won't yet suffer, but that will be more a deflationary issue. IMAO, you'll need ca$h outside the banking system as the fan blades speed up for the incoming poo.

tmosley's picture

Guess everyone believes in the system now, since there is practically no interest in buying PMs now.

My LCS has branched out and is selling fucking songbirds.

Ajax_USB_Port_Repair_Service_'s picture

On a % basis how can you call this a "crash"?