Central Bank of Russia proposes blanket ban on cryptocurrencies

Central Bank of Russia proposes blanket ban on cryptocurrencies

The Central Bank of Russia has reportedly proposed a blanket ban on the creation and use of all cryptocurrencies in the country. The ban has been imposed citing the dangers it poses to the nation’s financial system and environment.

The central bank said in its report that crypto resembles the characteristics of a pyramid scheme and also threatens the sovereignty of its monetary policy. It also said that crypto mining hurts the country’s green agenda, while also jeopardizing its energy supply and intensifying the negative effects of the spreading of cryptocurrencies, giving birth to incentives that promote ways to avoid regulation.

The bank also said that the potential risks of financial stability linked with crypto are higher for emerging markets, which also includes Russia.

The country had already banned crypto from being used to make payments, with the central bank prohibiting mutual funds from investing in it as well.

The recent report has called for individuals and businesses flaunting the rules to be held accountable for having put Russia’s crypto trading turnover at an estimated $5 billion annually.

Elizaveta Danilova, Head of the Financial Stability Department, Central Bank of Russia, stated that the proposals will not be applicable on assets that are held abroad by Russians and that people who have offshore exchange accounts are allowed to trade crypto.

Vyacheslav Volodin, Speaker of the lower house of parliament (State Duma), stated that the creation of a regulatory framework will be a priority in the spring session of State Duma, and that any ban needs to be passed into law before coming into effect.

Russia became the world’s third-largest crypto miner last year, following the U.S. and Kazakhstan, as per data released by Cambridge University in October. The country has become an important center for crypto mining after China made transactions related to crypto an illicit financial activity.

Vladimir Gutenev, the head of the Duma’s industry committee and a member of the ruling United Russia party stated that while Russia should regulate and tax crypto mining, it should not ban it considering its competitive advantages.

Source credit: https://www.aljazeera.com/economy/2022/1/20/russias-central-bank-proposes-ban-on-crypto-mining-and-trading