Russian Central Bank Proposes Ban On Crypto

January 20, 2022 2:07 pm

The Russian Central Bank has recently announced that it wants to ban crypto trading and mining activities due to multiple concerns with the industry.

The bank released a report that focused on describing cryptocurrencies as a form of a Ponzi scheme and called for a complete ban throughout Russia.

Reasons cited within the report were the volatile natures of the market and the fact that they would often be used to conduct illegal financial transactions.

The bank continued to warn that continued use of crypto for any services would be a threat to the country itself as it would allow for money to be transferred outside of the country without regulatory authorization and review.

As a result of these reasons, the ban would cover a wide variety of activities that are typically associated with cryptocurrencies which include bans for OTC trading desks, exchanges, and payments in general.

The bank also wants to focus on getting stricter in enforcing these potential new rules as it wants to introduce punishments for those who are involved in these crypto violations.

FT.com reports:

Russia’s central bank has proposed outlawing all cryptocurrency operations in the country, one of the world’s biggest centres for mining digital tokens.

Under the draft proposals, Russia would ban all cryptocurrency issuance and operations, stop banks from investing in cryptocurrencies, block exchanging crypto for traditional currency, and introduce legal liability for using crypto in purchases.

In a 36-page report published on Thursday, the central bank said: “The breakneck growth and market value of cryptocurrency is defined primarily by speculative demand for future growth, which creates bubbles.”

“Cryptocurrencies also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market,” it added.

The bank has also stated that it is worried about about the impact that crypto mining would have on its environment.

Currently, Russia accounts for 11.2% of all mining activity in the world which places it in third place behind the United States and Kazakhstan.

The country historically has already had problems with electrical power and fossil fuels usage so the addition of crypto mining draining the country’s power resources has made some officials increasingly concerned.

Cointelegraph.com shares:

The central bank report further proposes a complete crypto mining ban in the country, claiming that mining activities create new supplies, which leads to demand for other crypto services such as exchanges.

Crypto mining could undermine the existing green energy agenda and also disrupt Russia’s energy supply. The official paper read:

“Crypto mining creates a non-productive electricity expenditure, which undermines the energy supply of residential buildings, social infrastructure and industrial objects, as well as the environmental agenda of the Russian Federation.”

So far the announcement has had not effect on the cryptocurrency markets.

Historically, this is not the first time that government agencies in Russia have expressed their concerns as discussions over the use of crypto in the country have continued for multiple years already.

Additionally, this call for a ban would have to be first passed into law in order for it to start taking any effect.

As of right now, the country continues to deeply debate the pros and cons of the new emerging technologies and has talks about the need to build a framework that can decide the right regulations as these industries continue to evolve and grow at a rapid pace around the world.

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