Russia’s central bank has proposed banning the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, the well-being of citizens and its monetary policy sovereignty.
The move is the latest in a global crackdown on cryptocurrency as governments from Asia to North America fear highly volatile digital currencies operated by the private sector will undermine their control of financial and monetary systems.
Russia has argued for years against cryptocurrencies, saying they could be used to launder money or finance terrorism.
He finally gave them legal status in 2020 but banned their use as payment.
In December, the price of bitcoin fell after Reuters reported, citing sources, that the Russian regulator favored a complete ban on cryptocurrencies.
In a report on Thursday, the central bank said that speculative demand mainly drives the rapid growth of cryptocurrencies and that they exhibit the characteristics of a financial pyramid, warning that bubbles in the market could form, threatening the financial stability and citizens.
The central bank has proposed to prevent financial institutions from carrying out transactions with cryptocurrencies and the said mechanisms should be developed to block transactions aimed at buying or selling cryptocurrencies against fiat or traditional currencies.
The proposed ban includes crypto exchanges.
Russians are active cryptocurrency users, the central bank said, with an annual trading volume of about $5 billion (A$6.9 billion).
Russia is the world’s third-largest bitcoin miner, behind the United States and Kazakhstan, although the latter may face an exodus of miners amid fears of tougher regulations following the unrest. Beginning of the month.
The central bank said crypto mining creates power consumption issues.
Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete with others connected to a global network to solve complex mathematical puzzles.
The process consumes electricity and is often powered by fossil fuels.
“The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.
In August, Russia accounted for 11.2% of global “hashrate” – crypto jargon for the amount of computing power used by computers connected to the bitcoin network.
In its report, the central bank highlighted steps taken in other countries, such as China, to curb cryptocurrency activity.
He said he would work with regulators in countries where crypto exchanges are registered to collect information on Russian client operations.
In September, China escalated its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and putting pressure on crypto-related and crypto-related stocks. the blockchain.
The Russian regulator said the widespread use of crypto assets would limit monetary policy sovereignty, with higher interest rates needed to contain inflation.
He said the long-term potential of cryptocurrencies used for settlements was limited.
Meanwhile, the Bank of Russia plans to issue its own digital ruble, joining the global trend of developing digital currencies to modernize financial systems, speed up payments and counter a potential threat from other cryptocurrencies.
Australian Associated Press