Industry experts reveal possible ways Russian banks can block cryptocurrencies

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Amid the ongoing uncertainty about the future of Russian cryptocurrency, a local industry executive revealed potential methods for Russian banks to block crypto transactions.

Andrey Mikhaylishin, CEO of local crypto payment startup Joys, said that the Central Bank of Russia is now considering several possible options to make its crypto ban possible. Forbes Russia Report Friday.

Mikhaylishin said that one of the possible restrictions includes using a merchant category code (MCC) to prevent debit cards from making payments to cryptocurrency exchanges or wallets. The report pointed out that the executive learned about this blocking method from Russian bank employees.

The MCC code is a four-digit number used by credit card processors (such as Visa or Mastercard) to describe the merchant’s main business activities. For example, encrypted transactions are usually identified by the 6051 MCC code, while payments in grocery stores are identified by the 5411 MCC code. According to the report, Russian banks can force local banks to simply prohibit transactions using the 6051 MCC code.

Although Russia is clearly still discussing potential plans, some industry players question the effectiveness of this strategy.

Maria Stankevich, a member of the Russian Committee on Blockchain Technology and Cryptoeconomics, told Cointelegraph that potential MCC-based restrictions will trigger transparent companies to leave the country without affecting illegal crypto transactions:

“I am 100% sure that if they prohibit the use of the correct MCC to transfer to cryptocurrency, then honest transactions will leave the market first. There will still be gray cryptocurrency exchanges, and they will use other codes for trading, thus performing so-called miscoding .”

Stankevich stated that the miscoding penalties imposed on providers such as Visa are not sufficient to stop illegal cryptocurrency exchanges from operating.As previously reported, there are several gray cryptocurrency businesses in Russia. At least 50 of them are located in Moscow, The financial district of the Russian capital.

The executive also expressed optimism about Russia’s cryptocurrency industry, noting that the Bank of Russia is essentially the only regulator that opposes the use of cryptocurrency in the country:

“We have always known that the central bank opposes encryption and wants it to be banned, but I still don’t think this will be the way in Russia, because the central bank is a minority there.”

related: Governor of the Central Bank of Russia: Banning cryptocurrencies in Russia is “completely feasible”

“I personally know many senior officials in Russia, and they understand the importance of encryption,” Stankevich added.

The news comes after Elvira Nabiullina, Governor of the Central Bank of Russia, announced that the bank intends to Prevent local financial system From using encryption. Another executive of the bank subsequently claimed that Russians can only invest in cryptocurrencies such as Bitcoin (Bitcoin) Through foreign companies.