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What just happened? Russia has proposed following China in coming down hard on cryptocurrency. The country’s central bank has suggested banning the use and mining of crypto within its territories over concerns it could damage Russia’s financial system and environment.
Elizaveta Danilova, the Bank of Russia's Financial Stability Department director, presented the ‘Cryptocurrencies: trends, risks, measures’ report during an online press conference.
The report states that cryptocurrency bears many similarities to a pyramid scheme and is often used in criminal activities. It also undermines monetary policy sovereignty by offering citizens a way to take their money out of the national economy.
The report goes on to say that crypto mining is damaging to Russia’s green agenda, a risk to its energy supply, and can worsen the adverse effects of cryptocurrency’s spread.
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the central bank said.
Making payments using crypto is already banned in Russia, and mutual funds are prohibited from investing in it. Yet, the country is still the world’s third-largest crypto mining nation behind the US and Kazakhstan.
While the bank does not propose making the owning of cryptocurrency illegal, it wants harsher punishments for those who break the current rules and is asking for new laws to ban crypto’s use. As for mining, the report states that the "optimal solution" would be to ban it altogether in Russia.
It should also be noted that people with offshore exchange accounts would still be able to trade crypto, and any ban first needs to be passed by law.
Bitcoin’s price has fallen from around $43,200 to just under $39,000 in the last 24 hours.