Russia's Central Bank suggests banning cryptocurrency investment & mining: Report

As governments around the world crack down on decentralised currencies, Russia's Central Bank suggested a ban on cryptocurrency investment and mining. It argued that cryptocurrency poses a serious threat to financial stability, people's well-being, and the bank's monetary policy sovereignty.

According to the Bank of Russia, speculative demand is driving the rapid expansion of decentralised cryptocurrencies, which could lead to a market bubble. "Cryptocurrencies also show characteristics of a financial pyramid, as the rise in their prices is mostly driven by new market players' desire," the Bank was quoted by The Moscow Times as saying. 

The Bank of Russia outlined in its consultation paper that it wants to prohibit financial institutions from investing in or conducting any transactions with cryptocurrencies. The Central Bank also wants to outlaw bitcoin exchanges and services that support cryptocurrency trading. Russian residents' transactions using decentralised cryptocurrencies are estimated to be worth $5 billion (Rs 37,196.77 crore) per year, the Bank claimed. It also advocated prohibiting crypto mining, noting the threat it poses to Russia's financial stability as well as the implementation of the country's environmental goals, the Russian news outlet reported. 

Russia has third-largest share in the global crypto mining market

It is worth mentioning that Russia holds the third-largest share in the global crypto mining market. The United States has the largest share followed by Kazakhstan. Last year, China imposed a ban on bitcoin mining.

According to the Bank of Russia's head of financial stability, modifications to Russian legislation to ban crypto mining and investment will be drafted in the coming months. While it is illegal to conduct transactions with cryptocurrencies in Russia, investing in and acquiring cryptocurrencies through exchanges is allowed, due to a recent amendment. In order to maintain control over its financial and monetary systems, the Bank of Russia also intends to print its own digital ruble, as per The Moscow Times report. 

Cryptocurrency holds value but cannot be used for oil trade: Putin

Earlier in the month of October, last year, Russian President Vladimir Putin had stated that cryptocurrency has value but it cannot be used for oil trade, primarily due to its high energy consumption. While Putin dismissed the possibility of using crypto, he did not mince words on Moscow’s attempt to move away from reliance on the US dollar for trade.

Putin said that the US dollar had a competitive advantage over other currencies and that Washington was making a "huge mistake" in using its currency as a "sanction instrument," CNBC news reported. 

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