While Russian authorities are still trying to define the legal status of bitcoin, the virtual currency has found use in Moscow in the lobby of the country’s biggest bank.
A coffee stand at the headquarters of state-owned Sberbank PJSC is one of the first Moscow vendors to take bitcoin, allowing clients to buy espresso and croissants with the crypto-currency even as some Russian regulators threaten to ban its use.
Russia is late to the bitcoin party, still debating its legality even as one of the people who helped popularize the once-trendy digital currency globally says the software that it relies on is too rigid to gain wide adoption. The economy could benefit if the Kremlin abandons plans to criminalize virtual currencies because it might lead to the more active development of innovative technologies, according to Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles.
“Most governments have come to the conclusion that banning bitcoin and other crypto-currencies would both suppress real innovation that is developing around this new technology as well as futile, since anybody with an internet connection can buy and sell bitcoin – that is one of the key benefits,” Luria said by e-mail.
The Bank of Russia equated bitcoins to a financial pyramid in 2014, while the Finance Ministry this year drafted a law that threatened fines and imprisonment of up to seven years for anyone using crypto-currencies.
The government has softened its stance of late, with Deputy Finance Ministry Alexey Moiseev saying in August that the law will probably only target the mining of digital currencies. The central bank is looking into the technology, Deputy Governor Olga Skorobogatova said this month.
Stefan Thomas, who introduced millions of people to the concept of the virtual currency with his 2011 “What is Bitcoin?” YouTube video, complained in an August essay that blockchain, the ledger software that makes it possible, is “a pain to work with.”
Sberbank’s Chief Executive Officer Herman Gref said last year that he owns some bitcoins. He said on Friday that Russia shouldn’t ban crypto-currencies because it would hinder the country’s attempts to develop new technology.
While the coffee shop in Sberbank’s headquarters is an independent vendor, it’s counting on such attitudes at the executive level to enable it to continue accepting bitcoin, according to its co-owner Timofei Kulikov. He began the experiment after deciding it was too expensive to mine the currency himself, saying it’s easier to “sell for bitcoins something that people buy every day.”
While he accepts payment in bitcoins for coffee and food at the cafe, which opened in August, he reimburses the business in rubles so that the transaction is effectively between the customer and himself as two individuals. One bitcoin was worth $606.96 as of 1:43 p.m. in Moscow, enough for nearly 400 cups of coffee.
“There’s not a single law that would prohibit buying bitcoins to me as an individual,” said Kulikov, a law graduate.