Bank of Russia proposes to ban the use and mining of cryptocurrencies

Bank of Russia, the country’s monetary authority, proposed this Thursday (20) to ban the mining, issuance, circulation and trading of cryptocurrencies on Russian territory.

As reported by Reuters, the entity cited threats to financial stability, the well-being of citizens and the sovereignty of monetary policy.

The relevant proposals were included in the regulator’s report for public consultation.

Bank of Russia against cryptocurrencies

This is not, however, Russia’s first foray into cryptocurrencies. On other occasions, the country has already taken a stance against this industry, saying that crypto-assets can be used in money laundering and terrorist financing.

In 2020, the country even granted legal status to cryptocurrencies. However, it prohibited its use as a means of payment.

Also according to Reuters, in a report published on Thursday, the central bank said that cryptocurrencies grew mainly due to speculative demand.

Furthermore, it claimed that digital currencies carried financial pyramid characteristics, threatening financial stability and citizens.

Based on this, the Russian monetary authority proposed to prevent financial institutions from carrying out any operations with cryptocurrencies. The ban also extends to cryptocurrency exchanges.

But, according to the head of the central bank’s financial stability department, Elizaveta Danilova, there are no restrictions on the possession of cryptocurrencies.

The central bank further reported that Russians are active users of cryptocurrencies, having an annual transaction volume of around $5 billion.

To Reuters, Binance said it is committed to working with regulators. It also highlighted that it hopes the release of the report will spark a dialogue with the central bank on protecting the interests of Russian cryptocurrency users.

Following in China’s footsteps?

Also in the report, the Bank of Russia said it would work with regulators in countries where cryptocurrency exchanges are registered to gather information about Russian customer operations.

He also pointed to measures taken in countries like China to curb cryptocurrency activities.

According reports, in September, China reiterated its ban on cryptocurrency transactions and mining.

But Danilova stressed that for now, “there are no plans to ban cryptocurrencies similar to China’s experience.”

“The approach we have proposed will suffice,” she said.

Cryptocurrency Mining

Currently, Russia is the world’s third largest player in BTC mining. The country is second only to the United States and Kazakhstan in this regard.

But that could change. After all, the Bank of Russia said that mining created problems for energy consumption.

“The best solution is to ban cryptocurrency mining in Russia,” the bank said.