Russian Central Bank Proposes Bill to Ban Cryptocurrency Mining and Use in Russia
According to Financial Times reports, the Central Bank of Russia has officially proposed a bill to ban Russian citizens and companies from mining and using cryptocurrencies, including Bitcoin. The Central Bank of Russia is not a proponent of cryptocurrencies, on the contrary, it believes that cryptocurrencies are for money laundering and the financing of terrorism.
The Russian government’s attitude towards cryptocurrencies has also been wavering. Previously, the Russian government also opposed cryptocurrencies but did not introduce clear laws to prohibit them. Even in 2020, the Russian government gave cryptocurrencies legal status, but only prohibited Russian citizens and businesses from using cryptocurrencies as a means of payment.
The Central Bank of Russia said in a news release that cryptocurrencies could threaten financial stability, the well-being of citizens, and the central bank’s local currency monetary policy and sovereignty. The central bank emphasized that speculative demand drives the rapid growth of cryptocurrencies, which have the characteristics of a financial pyramid and are prone to bubbles that threaten financial stability.
In a 36-page report published on Thursday, the central bank said: “The breakneck growth and market value of cryptocurrency is defined primarily by speculative demand for future growth, which creates bubbles. Cryptocurrencies also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market.”
To this end, the Central Bank of Russia proposed to prohibit financial institutions from conducting any business with cryptocurrencies and to establish mechanisms to prevent cryptocurrency transactions in Russia. In addition to financial stability concerns, the Russian central bank also emphasized the challenges posed by cryptocurrency mining. Cryptocurrency mining wastes a lot of traditional fossil energy, for which the Central Bank of Russia said the best solution is to ban any cryptocurrency mining in Russia.
