The central bank of Russia has called for a blanket ban on Bitcoin mining and the trading/usage of cryptocurrencies in the country. The bank has cited threats to its monetary policy and environmental concerns.
Bank Of Russia Seeks Blanket Crypto Ban
Bank of Russia released a 37-page report on January 20, stating that the country must ban crypto.
Elizaveta Danilova, the director of the bank’s Financial Stability Department, revealed the report entitled “Cryptocurrencies: trends, risks, and measures” during an online media conference.
The report indicates that cryptocurrencies like Bitcoin are extremely volatile and are mostly used in nefarious activities such as tax evasion and fraud. For that reason, the usage of cryptocurrencies poses a big risk to the national economy by taking money out of it and putting it into crypto assets. Moreover, cryptocurrencies are difficult to monitor and regulatory bodies have an incredibly hard time maintaining proper monetary policies over them.
The central bank is, therefore, proposing fresh laws and regulations that fully prohibit any crypto activities throughout Russia. The report particularly states that crypto payments and also trading on OTC desks, crypto exchanges as well as peer-to-peer platforms must be banned immediately.
The bank further suggested introducing harsh penalties for breaching this ban. According to the Bank of Russia, no financial institution should be allowed to invest its assets into cryptocurrencies, and no resident should utilize the nation’s infrastructure to conduct crypto transactions.
Bitcoin mining, which has emerged as a big industry in Russia in recent years, is also being targeted by the Bank of Russia. The bank claims that crypto mining creates new supplies, subsequently increasing the demand for other cryptocurrency services like exchanges. Additionally, crypto mining undermines Russia’s environmental agenda and also jeopardizes the country’s energy supply.
It should be noted that Russia became the fourth-biggest contributor to bitcoin mining after China clamped down on mining operations back in May. If Russia indeed outlaws crypto, the country could experience a miners’ exodus similar to the one seen in China.
Is Russia Paving The Way For The Development Of A Digital Ruble?
When China imposed a ban on crypto mining and trading last summer, plenty of crypto natives suggested that the country was creating room for its digital yuan. Notably, China’s swift progress on its DCEP has compelled global powers to look into central bank digital currencies (CBDCs) more actively.
That being said, Russia’s prime focus could be the development of its sovereign digital currency. In fact, the country’s central bank expects to commence digital ruble trials this year. After these tests, the bank will define a clear plan for its implementation.
It’s too early to speak about the consequences of Russia’s suggested blanket ban. However, the $92 billion in digital assets held in the country could be adversely affected if the ban is introduced.