Cryptocurrencies called too risky, Putin urges regulation

Bitcoin investors were hit Tuesday by a double whammy of worrisome news from Russia, where President Vladimir Putin denounced the cryptocurrency as risky and used by criminals, and the country’s central bank said it would support moves to block websites dealing in bitcoin and other virtual currencies.

“The use of cryptocurrencies bears serious risks,” which include money laundering, tax evasion and terrorism funding, Putin said at a conference in Sochi, Russia, according to Bloomberg News. Putin called for more regulations, and said Russia should look to other nations in developing rules. He warned, though, that “it’s also important not to put up too many barriers,” Bloomberg reported.

Speaking at a separate conference in Moscow, Sergei Shvetsov, the first deputy governor of Russia’s central bank, said investors needed to be protected from “dubious” currencies. “We cannot give direct and easy access to such dubious instruments for retail (investors),” Shvetsov said, according to Reuters.

Shvetsov compared the high risk of bitcoin to a pyramid scheme.

“We see bitcoin gradually turning into an asset acquired for the purpose of obtaining a high yield in a short period of time, meaning it has signs of a financial pyramid,” Shvetsov said, according to the Russian news agency Tass.

Despite the harsh language, Russia is unlikely to ban bitcoin or virtual currencies, as China is moving to do.

“There is no sense in banning them, there is a need to regulate them,” Russia’s Finance Minister Anton Siluanov said last month.

Investors appeared largely unfazed, and the price of bitcoin BTCUSD, -0.39% dipped only slightly Tuesday. The cryptocurrency is up nearly 400% year to date.