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.
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.
In September, China intensified its crackdown on cryptocurrencies with a complete ban on all crypto transactions and mining, hitting bitcoin and other large coins, and suppressing crypto and blockchain-related stocks.
Russia’s regulator has said that the proliferation of cryptocurrencies would limit the sovereignty of monetary policy, which would require higher interest rates to contain inflation.
He said the long-term potential of the cryptocurrency used for settlements is limited.
Meanwhile, the Bank of Russia plans to issue its own digital ruble by joining the global trend of developing digital currencies to modernize the financial system, speed up payments and counter the potential threat of other cryptocurrencies.