Russia proposes blanket ban on crypto mining and trading – undermines sovereignty of monetary policy

Aljazeera via Bloomberg | | Jan 20, 2022

russian central bank proposes crypto mining ban - Russia proposes blanket ban on crypto mining and trading - undermines sovereignty of monetary policyRussia’s central bank said in a report on Thursday that crypto bears the hallmarks of a pyramid scheme and undermines the sovereignty of monetary policy.

Russia’s central bank proposed a blanket ban on the use and creation of all cryptocurrencies within one of the world’s biggest crypto-mining nations, citing the dangers posed to the country’s financial system and environment.

Crypto bears the hallmarks of a pyramid scheme and undermines the sovereignty of monetary policy, the central bank said in a report Thursday. It also took aim at mining, which it said hurts the country’s green agenda, jeopardizes Russia’s energy supply and amplifies the negative effects of the spread of cryptocurrencies, creating incentives for circumventing attempts at regulation.

“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the central bank said.

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Russia already bans the use of crypto to make payments and the central bank in December prohibited mutual funds from investing in it. Thursday’s report called for individuals and businesses that flaunt the rules to be held to account, citing estimates that put Russian’s crypto trading turnover at about $5 billion a year.

Proposals would not apply to assets held abroad by Russians, Elizaveta Danilova, the central bank’s financial stability department head, said at an online briefing Thursday, adding that people with offshore exchange accounts will be able to trade crypto. While any ban would first need to be passed into law before taking effect, speaker of the lower house of parliament Vyacheslav Volodin said this week that creating a regulatory framework will be a priority in the State Duma’s spring session.

“We hope that this proposal will be discussed with the industry,” co-founder of BitCluster Vitaliy Borschenko said by phone. “The central bank’s main concern is that cryptocurrency won’t be traded in Russia and crypto mining poses no risks in this regard.”

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