Russia Cryptocurrency Ban | Central Bank of Russia Proposal on Crypto

Russia may soon ban cryptocurrencies. Russia’s central bank on Thursday indicated so by proposing banning the use and mining of cryptocurrencies in Russia. The reason they cited for this is threats to financial stability, citizens’ wellbeing, and its monetary policy sovereignty.

Worldwide Crackdown on Crypto

• The move is the latest in a global cryptocurrency crackdown as governments from Asia to the United States worry that privately operated and highly volatile digital currencies could undermine their control of financial and monetary systems.
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Russia a Major Crypto Miner Country

• Russia is the world’s third-largest player in bitcoin mining, behind the United States and Kazakhstan. That is why the recent proposal of Russia’s central bank on crypto is very significant about the future of Crypto. 
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• In August, Russia accounted for 11.2 percent of the global “hash rate” – crypto jargon for the amount of computing power being used by computers connected to the bitcoin network.
• Active cryptocurrency users, Russians have an annual transaction volume of about $5 billion, as per the Central Bank of Russia.

Threat to Energy

• The Central Bank of Russia said crypto mining created problems for energy consumption. Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete against others hooked up to a global network to solve complex mathematical puzzles. The process guzzles electricity and is often powered by fossil fuels. “The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.
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Russia’s Argument

• Russia has argued for years against cryptocurrencies, saying they could be used in money laundering or in financing terrorism. It eventually gave them legal status in 2020 but banned their use as a means of payment.
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Already started to crackdown Crypto

• Russia already bans the use of crypto to make payments and the central bank in December prohibited mutual funds from investing in it.
• Thursday’s report called for individuals and businesses that flaunt the rules to be held to account, citing estimates that put Russia’s crypto trading turnover at about US$5 billion a year.
• However, the restrictions on owning cryptocurrency are not envisaged yet, said Elizaveta Danilova, head of the central bank’s financial stability department.

Exchanges are also in Radar

• The proposed ban includes crypto exchanges. Cryptocurrency exchange Binance told Reuters it was committed to working with regulators and hoped the report’s release would spawn dialogue with the central bank on protecting the interests of Russian crypto users.
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Are they following China?

• The central bank said it would work with regulators in countries where crypto exchanges are registered to collect information about the operations of Russian clients. It pointed to steps taken in other countries, such as China, to curb cryptocurrency activity.
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• In September, China intensified its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.
• However, Elizaveta Danilova, head of the central bank’s financial stability department said,  “For now there are no plans to ban cryptocurrencies similar to the experience of China,” Danilova said. “The approach we have proposed will suffice.”
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Government Crypto?

• The central bank, which is planning to issue its own digital rouble, said crypto assets becoming widespread would limit the sovereignty of monetary policy, with higher interest rates needed to contain inflation.
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Last Words

• The proposal from Russia is of utmost importance, especially when various governments taking steps to crack down on crypto. Now, only time will tell, what impact this will bring to the Crypto Industry. 
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