BAN ON CRYPTO CREATES GLOBAL OUTRAGE – RUSSIA

Russia’s central bank proposed prohibiting the usage and mining of cryptocurrencies on Russian soil

On Thursday, Russia’s central bank proposed prohibiting the usage and mining of cryptocurrencies on Russian soil, citing concerns to financial stability, residents’ well-being, and the country’s monetary policy autonomy.

The move is the latest in a string of worldwide cryptocurrency crackdowns, as governments from Asia to the United States fear that privately run and highly volatile digital currencies would threaten their authority over banking and monetary systems.

For years, Russia has argued that cryptocurrency may be used to launder money or fund terrorists. In 2020, they were granted legal status, but their use as a form of payment was prohibited.

The central bank warned in a paper released on Thursday that speculative demand was primarily responsible for cryptocurrencies’ quick growth and that they had features of a financial pyramid, warning of possible market bubbles that might jeopardise financial stability and citizens.

The bank proposed prohibiting financial institutions from engaging in any cryptocurrency transactions and suggested that measures be devised to stop transactions involving the purchase or sale of cryptocurrencies for fiat currencies.

Crypto exchanges are included in the proposed prohibition. Binance, a cryptocurrency exchange, told Reuters that it was dedicated to cooperating with regulators and hoped that the publication of the study would spark a conversation with the Russian central bank about protecting the interests of crypto consumers.

According to Elizaveta Danilova, head of the central bank’s financial stability section, no restrictions on cryptocurrency ownership are planned.

Russians are active bitcoin users, with an annual transaction volume of roughly $5 billion, according to the bank.

SHADOWING CHINA?

The central bank said it would work with regulators in countries where crypto exchanges are registered to collect information about the operations of Russian clients. It pointed to steps taken in other countries, such as China, to curb cryptocurrency activity.

SHINING A LIGHT ON CHINA?

The central bank stated that it would collaborate with regulators in countries where crypto exchanges are registered to collect data on Russian clients’ transactions. Other countries, such as China, have taken steps to curtail cryptocurrency activities, according to the report.

In September, China tightened its grip on cryptocurrencies by imposing a blanket ban on all crypto transactions and mining, causing bitcoin and other major coins to plummet in value and putting pressure on crypto and blockchain-related equities.

“At this time, there are no plans to ban cryptocurrencies in the same way that China has,” Danilova added. “The strategy we’ve presented will be sufficient.”

The report’s relevance was downplayed by Joseph Edwards, head of financial strategy at crypto business Solrise Group, who said no one outside of Russia would be concerned.

“While Moscow, like Beijing, is constantly wagging its sabre over ‘crypto prohibitions,’ Russia has never been a pillar of any element of the business in the same way that China has been at times,” he said.

Crypto MINING

Russia is the world’s third-largest bitcoin mining country, trailing only the United States and Kazakhstan, but the latter may see a miner exodus as a result of fears of tighter regulation following upheaval earlier this month.

The Bank of Russia stated crypto mining creates concerns for energy consumption. Bitcoin and other cryptocurrencies are “mined” by powerful computers competing to solve complicated mathematical puzzles against others connected to a worldwide network. The process consumes a lot of electricity and is frequently run on fossil fuels.

The bank stated, “The best option is to impose a ban on cryptocurrency mining in Russia.”

In August, Russia accounted for 11.2 percent of the worldwide “hashrate,” which is crypto jargon for the amount of computing power used by bitcoin network computers.

BitRiver, a Moscow-based data centre that hosts bitcoin miners in Siberia, said it did not believe a complete crypto ban was feasible, and that a balanced view would emerge once several ministries discussed the suggestions.

The central bank, which plans to issue its own digital rouble, claims that the widespread adoption of crypto assets will constrain monetary policy sovereignty, requiring higher interest rates to keep inflation under control.

By the time Russia announced this ban. Ethereum dropped near $2200 on Jan 24. It was the lowest price since July 2021.

The bank stated, “The best option is to impose a ban on cryptocurrency mining in Russia.”

In August, Russia accounted for 11.2 percent of the worldwide “hashrate,” which is crypto jargon for the amount of computing power used by bitcoin network computers

BitRiver, a Moscow-based data centre that hosts bitcoin miners in Siberia, said it did not believe a complete crypto ban was feasible, and that a balanced view would emerge once several ministries discussed the suggestions.

The central bank, which plans to issue its own digital rouble, claims that the widespread adoption of crypto assets will constrain monetary policy sovereignty, requiring higher interest rates to keep inflation under control.

The Bank of Russia is moving forward with the digital ruble and is renewing its call for a crypto ban.

The Bank of Russia announced that the digital ruble, the country’s intended central bank digital currency, has begun its pilot phase (CBDC). The regulator has stated that it must become an alternative to cryptocurrencies for Russians, which should be completely outlawed.

Simultaneously, the central bank reaffirmed its call for a comprehensive ban on cryptocurrency. According to Forbes, the regulator has expressed its opposition to cryptocurrency regulation to the Ministry of Finance, which had previously recommended permitting regulated cryptocurrency purchases through licenced Russian banks. This strategy was later laid out in the government’s road map for cryptocurrency regulation.