The Russian central bank has suggested a ban on cryptocurrency use and mining. Cryptocurrency poses a danger to financial stability, individuals’ well-being, and the bank’s monetary policy sovereignty, according to the bank.
For years, Russia has opposed cryptocurrencies, arguing that they can be useful to fund terrorism or money laundering. In 2020, Russia granted cryptocurrency legal status but prohibited its usage as a means of payment.
The central bank stated in a paper released on Thursday that speculative demand drove cryptocurrencies’ rapid growth. Also, they had features of a financial pyramid, warning that market bubbles might jeopardize financial stability and citizens.
The bank proposed prohibiting financial institutions from engaging in any cryptocurrency transactions. It then suggested measures to limit transactions involving the purchase or sale of cryptocurrencies for fiat or traditional currencies.
According to the central bank, Russians are active cryptocurrency users, with an annual transaction volume of roughly $5 billion.
Governments all around the world are cracking down on cryptocurrencies. Thereby, fearing that privately run, highly volatile digital currencies may undermine their control over financial and monetary systems.
Crypto exchanges are a part of the proposed prohibition. Binance, a cryptocurrency exchange, told Reuters that it was ready to cooperate with regulators. It hoped that the publication of the study would spark a conversation with the Russian central bank about protecting the interests of crypto consumers.
According to Elizaveta Danilova, head of the central bank’s financial stability section, no restrictions on cryptocurrency ownership are likewise planned.
“Best solution is to introduce a ban on cryptocurrency mining in Russia”: Bank
Russia is the world’s third-largest bitcoin mining country, trailing only the United States and Kazakhstan. But the latter may see a miner exodus as a result of fears of tighter regulation following upheaval earlier this month.
Crypto mining, according to the Bank of Russia, is also causing concerns with energy use. Bitcoin and other cryptocurrencies are “mined” by powerful computers competing to solve complicated mathematical puzzles against others connected to a worldwide network. The process consumes a lot of electricity and also frequently runs on fossil fuels.
“The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.