Russia’s Central Bank Calls For Total Ban On Crypto Use And Mining
Russia’s central bank has called for a complete ban on cryptocurrency use and mining within its territory, citing threats to financial stability and the sovereignty of its monetary policy, as well as energy use concerns.
Russia has proposed a full ban on crypto, including both mining and use of cryptocurrencies. The country’s Central Bank suggested that the trading of cryptocurrencies must come to a stop immediately. In the report put forth in an online press conference, the Russian government along with the Bank of Russia suggested this regulatory measure.
This blanket ban on cryptocurrency is tied to risks of financial instability and rising illegal activities. The digital asset apparently posed a serious threat to the sovereignty of Russia’s monetary policy. Russia holds the third rank in bitcoin mining after US and Kazakhstan.
In a 37-page report, Russia’s central bank said that cryptocurrencies are volatile, bear the hallmarks of pyramid schemes, and are widely used for illegal purposes. It also argued that cryptocurrency mining hurts Russia’s environmental agenda, jeopardizes the country’s energy supply, and makes maintaining optimal monetary policy harder.
Bank of Russia suggested that the country needed new laws and regulations that would effectively outlaw any crypto-related activities domestically. Specifically, the bank proposed a ban on all crypto transactions, including measures against domestic crypto exchanges, over-the-counter trading desks, and peer-to-peer platforms.
The report stated:
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia. This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy.”
According to the bank, financial institutions should also not be allowed to invest in cryptocurrencies, and residents should not use the country’s financial infrastructure to facilitate crypto transactions.
Cryptocurrencies are very popular in Russia. According to the report, the domestic annual crypto transaction volume is about $5 billion.
Ban on Crypto Mining
Also, Russia is currently the home of the third-largest Bitcoin mining industry in the world, trailing only behind the U.S. and Kazakhstan.
The crypto mining activity in Russia and Kazakhstan exploded after China, previously the largest crypto miner, banned the industry and triggered an exodus of miners. Currently, most of Russia’s crypto mining industry is located in Siberia, where the temperatures are low and electricity cheap.
Commenting on crypto mining the report stated:
“Increased electricity consumption in the process of cryptocurrency mining contributes to an increase in the carbon footprint, which is clearly contrary to the goals of the global sustainable development agenda.”
In light of rising civil unrest and worsening energy crisis, Kazakhstan may see a miner exodus similar to the earlier one in China. If that happens and Russia decides to ban crypto mining, then the U.S. would remain the most viable safe haven for the industry.
At the end of last year, Russia’s central bank similarly suggested an anti-crypto stance. Back then, the organization wanted to prohibit digital asset investments on Russian soil, citing similar potential risks.
Prior to that, Alexey Moiseev – Russia’s Deputy Finance Minister – informed that the Russian Federation has no plans to impose a complete crackdown on trading with cryptocurrencies. Contrary to many of his colleagues, he even expects blockchain technology to become a part of the future monetary system.
