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The bear is buzzing - Russia's central bank calls for a general ban on cryptocurrencies



 In a new analytical report, the Central Bank of Russia calls for a general ban on cryptocurrencies.


In the relevant analysis report entitled “Cryptocurrencies: Trends, Risks and Measures”, these are compared, among other things, with fraudulent Ponzi schemes, which is why the authors in Russia are asking for nothing more than a general ban on the asset class. They also point to the high volatility of cryptocurrencies and their usability for illegal activities as other major problem areas. In addition, they also see a threat to the state's currency sovereignty, and cryptocurrencies could also result in money flowing out of an economy's cycle. To that end, the report soberly sums it up:


"The risks to financial stability posed by cryptocurrencies are much higher for emerging markets like Russia."

For these reasons, Russia’s central bank is now calling for a blanket ban on cryptocurrency trading via over-the-counter (OTC) trading desks, crypto exchanges, and peer-to-peer (P2P) trading platforms. At the same time, the existing ban on crypto payments must be implemented more strictly, so the introduction of tough penalties would be advisable.


The central bank also considers a general ban on the mining of cryptocurrencies to be sensible, because the creation of new currency units would ultimately create the supply that would result in a corresponding demand on trading platforms. At the same time, the high power consumption in crypto mining would torpedo the climate targets set and would be a risk for the Russian power grid. In this context it says:


"Crypto mining generates unproductive electricity consumption that threatens the reliable energy supply of homes, public infrastructure and commercial areas, and also undermines the climate goals of the Russian Federation."

This would be a hefty loss for the global mining industry, as Russia had risen to No. 3 in the world mining industry after the Chinese government imposed a ban on the market-leading domestic industry last May.


As Bloomberg reports , Russia's domestic intelligence agency FSB is said to be the driving force behind the latest ban proposal. The secret service has probably urged the head of the central bank, Elvira Nabiullina, to take a hard line against the crypto industry. The presumed background is that the FSB fears that cryptocurrency payments could flow to opposition parties that can neither be traced nor stopped.


Finally, it should be noted that the Central Bank of Russia's analysis report is aimed at public discussion in its tone. Industry participants and stakeholders of all kinds can comment on the proposals until March 1, 2022.


Russia's central bank has been skeptical about cryptocurrencies for a long time . However, the crypto community had recently hoped that President Vladimir Putin's measured stance could mean that the crypto industry would be regulated rather than outright banned.

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