The Central Bank of Russia on Thursday proposed banning the mining and use of digital currency on Russian territory, mentioning threats to financial stability, the wellbeing of the citizens, and the sovereignty of its monetary policy. Let us know about the Russia crypto ban in detail.
Russia Crypto Ban: Why And How?
The move of Russia crypto ban is the latest in a cryptocurrency crackdown across the globe as governments from the United States to Asia are cautious about the fact that privately functioning and highly fluctuating digital currencies could undermine their control of monetary and financial systems.
Russia has been urging for years against digital currencies, stating they could be utilized to finance terrorism and also in money laundering matters. It eventually provided their legal status in 2020 but their use was banned as a payment means.
In a report released on Thursday (20.01.2022), the central bank of Russia stated that speculative demand initially determined the rapid growth of the digital currency and that they had the features of a financial pyramid, cautioning potential bubbles in the sector, threatening the citizens and the financial stability.
The bank proposed stopping financial institutions from conducting any operations with digital currencies and stated a mechanism should be created to block the transactions that are aimed at purchasing or selling digital currencies for fiat currencies.
The Russia crypto ban includes cryptocurrency exchanges. Binance which is a popular digital currency exchange said in an interview that they were committed to operating with the regulators and wished the release of the report would generate discussions with the central banks on safeguarding the interest of the Russian crypto users.
Restrictions and regulations on owning digital currencies are not yet planned as per a statement by the head of the financial stability department of the central bank, Elizaveta Danilova. Active users of digital currencies have an annual volume of transactions worth $5 billion, the bank stated.
Is Russia Crypto Ban Shadowing China?
The central bank of Russia stated that it would operate with regulators in nations where the digital currency exchanges are registered to assemble data about the functioning of the Russian clients. It indicated the steps that have been taken in other nations like China to curb the activities of the digital currency.
China, in September, intensified the Chinese crypto crackdown with a complete ban on the digital currency mining and transactions, hitting BTC and other important coins and pressuring blockchain and crypto related stocks. Danilova said,
“For now there are no plans to ban cryptocurrencies similar to the experience of China. The approach we have proposed will suffice.”
Joseph Edwards, who is the head of the financial strategy at crypto company Solrise Group, stated the importance of the report, stating no one outside Russia would be losing their sleep over it. He said,
“Moscow, like Beijing, is always rattling its saber over ‘crypto bans’, but Russia has never been a pillar of any facet of the industry in the same way as China has been at times.”
Cryptocurrency Mining In Russia
Russia is the third largest nation across the globe in Bitcoin mining, behind the United States and Kazakhstan, even though there are several issues around Kazakhstan that are going on. According to the central bank of Russia, crypto mining formed issues for the consumption of energy. That is the reason Russia calls full crypto ban. Bitcoin and other digital currencies are mined by strong computers that fight against others hooked up to a worldwide network to solve complicated mathematical problems. This process consumes a good amount of electricity and is often powered by fossil fuels. The bank stated,
“The best solution is to introduce a ban on cryptocurrency mining in Russia.”
In August 2021, Russia accounted for a total of 11.2% of the hash rate globally – crypto jargon for the quantity of computing power being availed by computers that are connected to the Bitcoin network.
BitRiver which is a Moscow based company and operates in data centers in Siberia hosting BTC miners stated that he did not think that Russia crypto ban would be done on a complete basis. The central bank that is planning to issue its own CBDC (Central Bank Digital Currency), stated that crypto assets are so widely adopted that it can limit the sovereignty of the nation’s monetary policy with higher rates of interest that is required to contain inflation.
The Bottom Line
The Russian monetary authority has proposed a complete ban on digital currency in the nation. They have proposed to stop all kinds of digital currency mining, and also transactions. This statement was declared by the central bank of Russia on Thursday and this may be implemented very soon. This article offered all the information regarding Russia crypto ban.
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