Chinese Merchants in Moscow Convert Most of Their Cash to Crypto

Chinese Merchants in Moscow Convert Most of Their Cash to Crypto



Featured

Chinese traders in Moscow’s huge wholesale bazaars have become the most active buyers and sellers of cryptocurrency in the Russian capital. The retail turnover there is estimated at almost $10 billion a month. Authorities say that most of it is converted to cryptocurrencies and sent back to China where it‘s exchanged to yuan.   

Also read: Cryptocurrency Is the Main Income for 12% of Russian Crypto Users

Crypto Flows Considered Easier To Track than Cash

The three largest bazaars in the Russian capital, “Moskva”, “Sadovod”, and “Food City”, make about ₽600 billion rubles each month (~$10 billion). That’s almost a quarter of the retail turnover in the Russian Federation. Practically none of it is deposited in bank accounts, according to Yuri Polupanov, head of the Central Bank’s Financial Monitoring and Currency Control Department. 90% of the businesses there are owned by Chinese merchants and producers, he said during the Thomson Reuters Forum in Moscow, RBC reported.

The retail centers have become pioneers in crypto trade. Russia’s Centrobank believes that Chinese traders convert most of their revenues to cryptocurrency and send it back home, where it is exchanged to yuan. Financial authorities have learned that crypto exchange bureaus are also operating there. Polupanov said that some of them are registered as financial services providers. Inspectors have found discrepancies between their accounting reports and the data gathered remotely by the CBR.

Chinese Merchants in Moscow Convert Most of Their Cash to Crypto
Food City, Moscow

There is no point in denying that cryptocurrency is used in wholesale and retail trade, thinks Elina Sidorenko, head of a working group at the Duma tasked with assessing crypto circulation. “It’s no secret that Chinese merchants are using cryptocurrencies through anonymous wallets. But as soon as they are defined legally in the civil code, these financial flows will be easily controlled. It’s easier to track them than cash,” she said.

Sidorenko believes the situation will improve in a few years. If the central bank has evidence of illegal crypto-fiat exchange, it should give it to the Prosecutor’s Office, she added. Elina Sidorenko noted that illegal activities in these bazaars are not a new phenomenon. Violations of immigration laws and crimes related to laundering of illicit proceeds are flourishing there, she said, admitting: “We should’ve dealt with all that long time ago.”

Relics from The ’90s

The story of improvised retail bazaars and flea markets in Russia dates back to the breakup of the Soviet Union. Many of them were set up in the capital in the ‘90s. They have been targeted by authorities since the early 2000’s. Trade there is often unregulated and untaxed. Government inspectors have found multiple violations of sanitary and fire safety standards, customs and migration regulations.

Chinese Merchants in Moscow Convert Most of Their Cash to CryptoIn the summer of 2009 Moscow authorities closed down the “Cherkizovskiy” bazaar, which was one of the biggest. Russian police found 6,000 containers of contraband worth an estimated $2 billion. The newer trade centers “Sadovod” and “Moskva” are now major wholesale markets for clothes and shoes, while “Food City” is the main food distribution center. The volume of retail trade in the Russian capital has been estimated at more than $72 billion dollars in 2017. The monthly turnover is between $5.5 and $7.8 billion. It reaches $49 billion USD a month on national level.

Cryptos like bitcoin have been gaining popularity in Russia, where 12% of crypto users now claim cryptocurrency is their main source of income. Two draft laws regulating the crypto sector have been introduced in the State Duma, the lower house of Russia’s parliament. The bill “On digital financial assets” legalizes activities like initial coin offerings and mining. A second draft aims to amend the civil code in order to legalize the use of “digital money” in payments. It’s still unclear whether the circulation of cryptos will be allowed in the country. Recently, Russian media reported that a new crypto exchange bureau is now buying and selling bitcoin for cash in Moscow.

Do you think regulating cryptocurrencies will minimize their use for illicit purposes? Share your thoughts on the subject in the comments section below.


Images courtesy of Shutterstock, Food City.


Bitcoin News is growing fast. To reach our global audience, send us a news tip or submit a press release. Let’s work together to help inform the citizens of Earth (and beyond) about this new, important and amazing information network that is Bitcoin.

Source