IOI
The Russian central bank today called for a blanket ban on cryptocurrencies, calling them as “volatile and frequently employed in criminal operations” and a threat to the country’s financial stability, residents’ well-being, and monetary policy sovereignty.
Cryptocurrencies “provide an outlet for people to take their money out of the national economy, so undermining it and making the regulators’ work of maintaining optimal monetary policies tougher,” according to the paper “Cryptocurrencies: Trends, Risks, and Measures.”
This comes only weeks after Russia’s Central Bank revealed plans to collect data from commercial banks on some private money transfers, including details of clients who traded cryptocurrency both domestically and internationally.
While Russia granted bitcoin legal status in 2020, it has already made it illegal to accept cryptocurrencies as a form of payment for products or services. The most recent study, however, focuses on stiffer punishments for individuals who break the rule.
According to reports, the bank is also planning to launch its own digital currency (CBDC) or digital ruble, which it believes will represent the future of banking in the country, meeting citizens’ demand for quick, efficient, and low-cost payment choices.
The country also wants to get rid of bitcoin from its banking infrastructure. In addition to the country’s continuing restriction on Russian mutual funds participating in cryptocurrency, the report advised that institutional investors not invest in cryptocurrency, and that financial institutions not store bitcoin as part of their holdings. Appropriate penalties for individuals who violate this have also been considered.
The list of prohibitions does not end here. While the research claimed that any crypto-circulation in the country should be prohibited by prohibiting online cryptocurrency exchanges, over-the-counter trading desks, and peer-to-peer platforms, it also addressed the issue of limiting its issuance.
The best answer is for Russia to prohibit bitcoin mining.
According to the Cambridge Bitcoin Electricity Mining Index, Russia (11.23 percent) is a major mining hub, trailing only the United States (35.40 percent) and Kazakhstan (18.10 percent) in terms of average monthly hash-rate, which is an indicator of the volume of cryptocurrency mining undertaken in the region as of August 2021.
And, in light of Kazakhstan’s continuing decision to turn off energy to crypto miners, the news may ruffle some feathers. Most miners, however, are unsurprised, claiming that the likelihood of a “outright” ban is remote and that the bank is only restating its previous position.
While the report calls a complete ban the “best” and “optimal” solution for Russia, it also points out that mining “creates a non-productive electricity expenditure, undermining the energy supply of residential buildings, social infrastructure, and industrial objects, as well as the Russian Federation’s environmental agenda.”
