On Thursday, January 20, the Bank of Russia published a report that proposes a ban on the use and mining of cryptocurrencies within Russian territory. In the report, the Central Bank of the Russian Federation stated that cryptocurrencies pose threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty. Furthermore, the regulator mentioned that the rapid growth of crypto coins was determined majorly by speculative demand and could lead to a market bubble that threatens citizens’ welfare and financial stability. Additionally, the regulator stated that crypto coins carry characteristics of a financial pyramid.
Therefore, the Russian Central Bank has proposed the prevention of financial institutions from conducting any operations involving crypto transactions. Moreover, the central bank identified that a mechanism should be created to block transactions aimed at selling or purchasing cryptocurrencies for fiat or traditional currencies. The regulator’s proposed ban includes cryptocurrency exchanges. In the report, the central bank described Russians as active crypto users conducting transactions with a volume of around $5 billion per year. The authority disclosed that Russia is the third largest cryptocurrency mining country in the world. According to the new report, the “potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia.”
Governments Are Strengthening Rules on Cryptocurrency
The move by the Central Bank of Russia is the latest attempt to crack down on cryptocurrencies as multiple governments have expressed similar concerns that crypto assets are a threat to their financial systems. Governments across the globe worry that privately operated digital currencies are highly volatile and could undermine their control of their monetary and financial systems. A few days ago, Erik Thedéen, the Vice Chairman of the European Securities and Markets Authority, expressed concern that Bitcoin mining has become a national issue for his native country, Sweden. Thedéen warned that crypto mining poses a risk to meeting climate change goals highlighted in the Paris Agreement. Recently, the Central Bank of Pakistan proposed a ban on cryptocurrency while US authorities discuss the need for more regulations within the industry. Last year, China’s PBOC imposed a complete ban on cryptocurrencies, citing illegal activities involving cryptocurrencies (such as pyramid schemes, gambling and money laundering) could disrupt the national economy.
