Russia's Central Bank Proposes a Total Ban on Crypto Mining and Trading

The Central Bank of Russia has called for a strengthening of the ongoing ban on cryptocurrency payments and sought to introduce punitive measures.

In a report published Thursday, Russia’s central bank called for a complete ban on domestic cryptocurrency trading and mining.

This paper is titled "Cryptocurrency. The Trends, Risks, Measures report compares cryptocurrencies to Ponzi schemes and calls for a blanket ban on cryptocurrencies across Russia. The authors claim that cryptocurrencies are very volatile in nature and are used as a tool for illicit activities. The report also warned that cryptocurrencies could pose risks to financial sovereignty and could help people take money from the nation’s economy. The report reads:

“For emerging markets, including Russia, the potential financial stability risks associated with cryptocurrencies are much higher.”

The Central Bank of Russia has called for a complete ban on over-the-counter trading desks, cryptocurrency exchanges, and peer-to-peer exchanges. The report also calls for a stronger ban on cryptocurrency payments and strict penalties for any violations.

The central bank report further proposes a blanket ban on cryptocurrency mining in the country, claiming that mining activities create new supply, leading to demand for other cryptocurrency services such as exchanges. Crypto mining could disrupt the existing green energy agenda, as well as disrupt Russia’s energy supply. The official document reads:

“Cryptocurrency mining leads to unproductive electricity expenditure, which disrupts the energy supply of residential buildings, social infrastructure and industrial objects, as well as the environmental agenda of the Russian Federation.”

Russia became the third-largest Bitcoin (BTC) mining hub, following China’s ban on cryptocurrency mining in May last year. The latest proposal for a blanket ban on cryptocurrency mining in the country could lead to yet another shake-up on the world's crypto mining landscape if action is taken.

According to Bloomberg, Russia's Federal Security Service (FSB) played a role in pushing for the ban, lobbying Central Bank Governor Elvira Nabiullina to take a hard line. According to the report, the Federal Security Service is concerned about the increasing availability of untraceable funds to opposition parties and the media through cryptocurrencies.

The report is framed as an invitation to public discussion, with a deadline of March 1, 2022 for comments and suggestions from interested parties.

The Central Bank of Russia has been skeptical of cryptocurrencies for quite some time. However, what can be seen as a sign of President Vladimir Putin’s interest and understanding of cryptocurrencies has led some to believe that the Russian government may choose to regulate the decentralized industry rather than ban it. (Cointelegraph)