In the latest move under the global cryptocurrency crackdown, Russia has proposed a ban on the use and mining of cryptocurrencies. Many governments, from Asia to North America, worry that privately operated and highly volatile digital currencies could undermine their control of financial and monetary systems.
For years, Russia has argued against cryptocurrencies, citing their potential misuse in money laundering and terrorism. In 2020, the country did give these currencies legal status but banned their use as a means of payment. In a report published January 20, 2022, Russia’s central bank said speculative demand primarily determined cryptocurrencies’ rapid growth and that they carried characteristics of a financial pyramid, warning of potential bubbles in the market, threatening financial stability and citizens.
The bank proposed preventing financial institutions from carrying out any operations with cryptocurrencies and said mechanisms should be developed to block transactions aimed at buying or selling cryptocurrencies for fiat currencies.
The proposed ban includes crypto exchanges. In an interview with news agency Reuters, cryptocurrency exchange, Binance said, it was committed to working with regulators and hoped the report’s release would spawn dialogue with the central bank on protecting the interests of Russian crypto users.
Russians are active cryptocurrency users and have an annual transaction volume of about $5 billion, the bank said. Elizaveta Danilova, head of the central bank’s financial stability department, said that restrictions on owning cryptocurrency are not envisaged.
The central bank said it would work with regulators in countries where crypto exchanges are registered to collect information about the operations of Russian clients. It pointed to steps taken in other countries, such as China, to curb cryptocurrency activity. In September, China intensified its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.