The Central Bank of Russia, true to its strict stance regarding decentralized digital money is pushing for an extensive ban on all crypto-related activities, including issuance, trading, and mining. A consultation paper published by the regulator cites threats to financial stability and citizens’ wellbeing among the main reasons for the proposed restrictions.
Russia’s Central Bank Seeks Public Opinion on Restrictive Crypto Policy
The monetary authority of Russia is advocating a ban on an array of crypto activities in a report titled “Cryptocurrencies: Trends, Risks, Measures.” The document was published Thursday and the regulator awaits comments and suggestions on its contents until March 1. The paper by the Central Bank of Russia (CBR), acknowledges both the explosive growth of crypto markets worldwide in the last year and the $5 billion annually in transactions made in crypto currencies by Russians.
However, it also pointed out that crypto-currencies are largely driven by speculation, and thus are forming a bubble. Their spread, it says, poses threats to the stability of Russia’s financial system, monetary policy sovereignty, and the wellbeing of its citizens.
Bank of Russia will work with Russia’s parliament and government to reduce the risk of criminal activity and the threats they pose. This includes the introduction of legal liability in the event of violations to the prohibition on crypto being used as a payment method for goods or services.
The authority has often referred to cryptocurrencies like bitcoin and stablecoins as “monetary surrogates” that are prohibited under current Russian law. The Russian government wants to prohibit their circulation and issuance in Russia’s economy. This includes through peer-to-peer and digital asset exchanges.
It has been strongly opposed to crypto investment and plans to ban financial institutions from investing in crypto and crypto-based instruments. It strongly opposes the use of Russian financial intermediaries or infrastructure to support cryptocurrency operations.
Bank of Russia also believes mining should not be neglected, because it allows for more people and economies to participate in crypto-currency markets. According to the regulator, the increasing scale of mining and its spread pose significant threats to the environment as well as the energy supply. The CBR believes that prohibition is the most effective solution.
Amid China’s crackdown on the industry, energy-rich Russia has become a mining hotspot. Digital currency minting is both a profitable venture and a source of additional income for households who have electricity subsidized. Some authorities in certain regions complain about the strain on power grids caused by rising energy consumption.
Bank of Russia will increase monitoring of crypto transactions. The bank plans to cooperate with regulators in other jurisdictions, particularly to obtain information regarding transactions by Russian citizens. The bank’s proposal, however, does not envisage restrictions on owning cryptocurrency outside of Russia, as noted by the head of the central bank’s Financial Stability Department, Elizaveta Danilova.
In advance of presenting its view on crypto regulations in this report, the Central Bank of Russia stated last month that it sees no place for cryptocurrencies in the country’s financial market. According to media reports, other Russian governments do not agree with its conservatism. The State Duma (the lower Russian house) has established a group that is currently preparing plans to regulate all aspects of Russian cryptospace.
Do you expect the Russian government to support Bank of Russia’s proposal to restrict crypto activities? Please leave your comments below.
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