What kinds of electronic currency are present now? What are the main principles of Bitcoin? What is the most recent answer of the Russian regulatory bodies to cryptocurrencies?

1. Electronic Currency
New Horizons or Serious Risks?
Vladislav Arkhipov
Of Counsel, Ph. D. *
20 February 2014
AML Conference, LexisNexis
Moscow
* Vladislav Arkhipov is an associate professor at
Saint Petersburg State University

2. A Relevant Problem
http://bit.ly/1fd48B3
20 February 2014
2

3. Scope of Definition
cryptocurrencies
ALT E R N AT I V E
ADDITIONAL
digital money
online games
VIRTUAL
© Alexandr Mitiuc - Fotolia.com
20 February 2014
3

4. Legal Focus
© Junial Enterprises - Fotolia.com
Electronic money – money which were
provided in advance by one party to other
party, while the latter keeps the record
of the amount provided without opening a
bank account in order to perform monetary
obligations of the party who provided the
money towards third parties with the use
of electronic means of payment only.
20 February 2014
- Federal Law on National Payment System,
Item 18, Article 3
4

5. Out of Control
crypto currencies




Bitcoin
Litecoin
PPCoin
Namecoin
© intheskies - Fotolia.com
virtual currencies
20 February 2014
5

6. How Bitcoin Works?
• No cover. Bitcoins do not imply advance payments.
• Peer-to-Peer. Each node is both client and server.
• Proof-of-work. Transactions form a sequence of e-signatures.
Bitcoin per se can be viewed not as a
payment, but as a record keeping system.
20 February 2014
6

7. Liberty Reserve Case
Allegations
Money laundering
Spring 2013
© Rrraum - Fotolia.com
Unlicensed money transmitting
business
Liberty
Reserve
model involved
using of own
‘digital
currency’ as an
anonymizing
filter for money
transfers
20 February 2014
7

8. Silk Road Case
Allegations
Drug trafficking
Fall 2013
Soliciting murder
Facilitating computer hacking
Internet trade
service hidden
within the TOR
network
144 000 BTC
seized by FBI
(USD 28 mil.)
Money laundering
© Erica Guilane-Nachez - Fotolia.com
20 February 2014
8

9. Recent Interpretation
Bitcoin:
• Has no conver and no liable
parties.
• Is a quasi-money which are
prohibited.
• May imply money laundering and
financing of terrorism.
• Can lead to prosecution for
aforesaid activities.
© blankstock - Fotolia.com
- Press-Service of the Bank of
Russia, 27 January 2014
20 February 2014
9

10. Political Aspect
‘What is needed is an electronic payment system based on cryptographic
proof instead of trust, allowing any two willing parties to transact directly with
each other without the need for a trusted third party.’
© fotomek - Fotolia.com
- Satoshi Nakamoto Bitcoin: A Peer-to-Peer Electronic Cash System, 2008
20 February 2014
10

11. The Future of Bitcoin
© fotogestoeber - Fotolia.com
20 February 2014
11

12. Thank you!
Vladislav Arkhipov
Of Counsel
IP / IT/ Telecommunications Practice
T:
+7 812 325 84 44
F:
+7 812 325 84 54
E:
vladislav.arkhipov@dentons.com
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