Russia Top Execs Speak Against Proposed Blanket Cryptocurrency Ban

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Russia’s Central Bank
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  • A couple of executives have spoken up against Russia’s proposed ban on crypto on Telegram. 
  • They cite issues relating to stifling technological growth and the impracticality of it. 
  • The proposed ban will see all crypto activities become illegal in the country. 

Last week, the Russian central bank released a proposal to ban cryptocurrency and crypto mining in the country. However, Russian tech executives as well as some political leaders have spoken out against such a plan.  

No Developed Country Bans Crypto

In two different posts on the encrypted messaging platform Telegram, Pavel Durov and Leonid Volkov spoke against the proposal. Each is arguing for a more balanced policy approach. 

Pavel Durov is one of the co-founders of WhatsApp’s competitor, Telegram and has extensive knowledge of the operations of the crypto industry. In 2018, Telegram had launched a cryptocurrency but had to shut the operation down after US courts ruled against them in 2020 after a long legal tussle with the SEC. Leonid Volkov, on the other hand, has become the spokesperson for the opposition in Russia. Last week, Volkov, along with his colleague Ivan Zhdanov, were labeled as terrorists and extremists by the Russian authorities due to their political activities. 

In his Telegram post, Durov noted that such a ban would lead to a brain drain in the IT sector and make a lot of startups redundant. “No developed country bans cryptocurrencies,” he said. He noted that such a ban would stifle blockchain development, which adversely affects society as these technologies are geared towards making many systems more secure and efficient. 

“The desire to regulate the circulation of cryptocurrencies is natural on the part of any financial authority. However, while recommending a total ban on cryptocurrencies, the Central Bank of the Russian Federation suggests throwing the baby out with water. Such a ban is unlikely to stop unscrupulous players, but it will put an end to legal Russian projects in this area,” said Durov. 

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Volkov, amongst other things, explained that such a ban would be impractical as it was difficult to stop person to person transactions. He added that what the Central Bank proposed was to resist technological advancement. “Luddism is doomed,” he said in conclusion  

The Proposed Ban

Last week, Russia’s Central Bank released a document titled “Cryptocurrencies: Trends, risks, measures.” The document recommended a blanket ban on cryptocurrencies and the mining of cryptocurrencies. 

On cryptocurrencies, the apex bank highlighted the volatile nature of these cryptocurrencies, also adding that they are favored for illegal activities. They added that “potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including Russia.” In the document, they proposed a ban on all forms of crypto exchanges in the country. The body also revealed their belief that the technology posed a threat to the sustainable energy goals of the country.

“Crypto mining creates non-productive electricity expenditure, which undermines the energy supply of residential buildings, social infrastructure, and industrial objects, as well as the environmental agenda of the Russian Federation,” read the document.