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Russian proposes banning cryptocurrencies, crypto mining

Crypto currency
This image, taken on November 28, 2021, represents a virtual cryptocurrency. REUTERS / Dado Ruvic / Illustration / File Photo

Russia’s central bank on Thursday proposed a ban on the use of cryptocurrencies and mining. 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 cryptocurrency crackdown as governments from Asia to the United States worry that highly privately operated highly volatile digital currencies could undermine control over their financial and financial systems.

Russia has argued for years against cryptocurrency that it could be used to finance money laundering or terrorism. It eventually granted them legal status in 2020 but banned their use as a means of payment.

In December, Reuters quoted sources as saying that Russia’s regulators were in favor of a complete ban on cryptocurrencies, following the fall in Bitcoin prices.

In a report released on Thursday, the central bank said that speculative demand mainly determines the rapid growth of cryptocurrency and that it has the characteristics of a financial pyramid, warning that the market could become bubbling, endanger financial stability and citizens.

The bank proposed that financial institutions be prevented from conducting any operations with cryptocurrency and said that a mechanism should be developed to block transactions aimed at buying or selling cryptocurrency for fiat or traditional currency. The proposed ban includes crypto exchanges.

Russians are active cryptocurrency users, with an annual transaction volume of about $ 5 billion, the central bank said.

Crypto mining

Russia is the world’s third-largest player in bitcoin mining, after the United States and Kazakhstan, although fears of tightening regulation following unrest earlier this month could see miners migrate later. read more

The central bank said crypto mining has created problems for energy consumption. Bitcoin and other cryptocurrencies are “mined” by powerful computers that compete against others connected to the global network to solve complex mathematical puzzles. The process consumes electricity and is often powered by fossil fuels.

“The best solution is to ban cryptocurrency mining in Russia,” the bank said.

In August, Russia’s share of the global “hashrat” was 11.2% – cryptocurrency for the amount of computing power used by computers connected to the Bitcoin network.

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