The Kremlin is set to ban the use and mining of cryptocurrencies for the security and well-being of the Russian people. The Russian central bank has proposed a blanket ban on crypto as it undermines the sovereignty of the country’s monetary policy. It said crypto mining hurts Russia’s green agenda and jeopardizes their energy supply. The central bank believes crypto mining increases the negative effects of the spread of cryptocurrencies and creates incentives for avoiding attempts at regulation.
The proposal to ban cryptocurrency in Russia doesn’t come as a surprise because the Kremlin has been criticizing digital assets for years. It has voiced concerns about crypto being used in money laundering, giving rise to financial terrorism and destabilizing economies. However, it should be noted that in 2020, Russia gave cryptocurrencies legal status but banned it from being used as a form of payment.
Russia’s central bank has acknowledged the rapid rise and adoption of cryptocurrencies. It has warned investors that crypto assets had characteristics of a financial pyramid. A financial pyramid is described as a risk structure that spreads investors’ risks across low-, medium- and high-risk vehicles. Majority of the assets are in safe, low-risk investments, while high-risk ventures make it to topmost of the pyramid.
The central bank wants mechanisms to block transactions aimed at buying or selling cryptocurrencies for traditional currencies. The proposed ban also covers crypto exchanges. Crypto analysts believe that Russia is following in China’s footsteps – a blanket ban on all things crypto, from mining, to exchanges to businesses.But Elizabeth Danilova, head of the central bank’s financial stability department, says they are not looking at a China-style of ban, for now. She said the approach the Russian authorities have proposed will suffice.