The Russians have appeared to have worked out that the virtual currency could be used for money laundering or financing terrorism, or buying rent boys and that treating it as a parallel currency is illegal. The Russian Prosecutor General's Office said that systems for anonymous payments and cyber currencies that have gained considerable circulation - including Bitcoin - are money substitutes and cannot be used by individuals or legal entities.
Russian law stipulates that the rouble is the sole official currency and that introducing any other monetary units or substitutes was illegal. Russia's central bank also said on January 27 that Bitcoin trade was highly speculative and that the unit carried a big risk of losing value.
"Citizens and legal entities risk being drawn - even unintentionally - into illegal activity, including laundering of money obtained through crime, as well as financing terrorism," it warned.
The Prosecutor's General Office said it was working with the central bank and other law enforcement agencies to tighten regulations and prevent legal offences committed with the use of pseudo-currencies.