The central bank of Russia has suggested prohibiting the usage and mining of cryptocurrencies on Russian soil, citing concerns to financial stability, residents’ well-being, and the country’s monetary policy autonomy.
The move is the latest in a string of international cryptocurrency crackdowns, as governments from Asia to the United States fear that privately controlled and highly volatile digital currencies would threaten their authority over banking and monetary systems.
For years, Russia has advocated against cryptocurrencies, claiming that they may be used to launder money or fund terrorists. In 2020, they were granted legal status, but their use as a means of payment was prohibited.
The central bank warned in a paper released on Thursday that speculative demand was primarily responsible for cryptocurrencies’ quick growth and that they had features of a financial pyramid, warning of possible market bubbles that might jeopardize financial stability and citizens.
The bank proposed prohibiting financial institutions from engaging in any cryptocurrency transactions and suggested that measures be devised to stop transactions involving the purchase or sale of cryptocurrencies for fiat currencies.
Crypto exchanges are included in the proposed prohibition. Binance, a cryptocurrency exchange, said it was dedicated to working with regulators and hoped that the publication of the study would spark a conversation with the Russian central bank about safeguarding the interests of crypto consumers.
According to Elizaveta Danilova, head of the central bank’s financial stability section, no restrictions on cryptocurrency ownership are planned.
Russians are active cryptocurrency users, with an annual transaction volume of roughly $US5 billion ($6.9 billion), according to the bank. The central bank stated that it would collaborate with regulators in countries where crypto exchanges are registered to collect data on Russian clients’ transactions.
Other countries, such as China, have taken steps to curtail cryptocurrency activities, according to the report. In September, China tightened its grip on cryptocurrencies by imposing a blanket ban on all crypto transactions and mining, causing bitcoin and other major coins to plummet in value and putting pressure on crypto and blockchain-related equities.
“For now, there are no plans to ban cryptocurrencies similar to the experience of China,” Ms. Danilova said. “The approach we have proposed will suffice.” Joseph Edwards, head of financial strategy at crypto firm Solrise Group, played down the report’s significance, saying no one outside Russia would be losing sleep over it. “Moscow, like Beijing, is always rattling its saber over ‘crypto bans’, but Russia has never been a pillar of any facet of the industry in the same way as China has been at times,” he said.