Russia is unlikely to ban crypto as Putin says mining benefits the country

Vladamir Putin, Russia’s President, has given crypto enthusiasts in the country a ray of hope after the central bank proposed a ban on cryptocurrencies and mining. A report unveiled this news earlier today, noting Putin held a virtual meeting with members of the Russian government, saying he would like to start by addressing crypto regulation, which is currently in the spotlight.

In the meeting, Putin said,

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Of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.

Reportedly, analysts found that the price of electricity in Russia during the Spring of 2021 was $0.06 (£0.045) per kilowatt-hour (kWh) for household use and up to $0.08 (£0.06) for businesses. In comparison, a kWh of electricity in France costs $0.20 (£0.15) for households and $0.14 (£0.10) for businesses.

During the meeting, Putin also asked the country’s central bank to meet with the government in the future to have a sit-down and reach a consensus on the use of crypto.

Bank of Russia’s proposal on banning crypto hits a brick wall

This news comes after the Bank of Russia published a report, suggesting that the country implements an outright ban on domestic crypto trading and mining. In the report, the central bank noted that the risks of crypto are higher for emerging markets like Russia.

The Bank of Russia added,

The status of the Russian ruble, which is not a reserve currency, makes it impossible to apply a soft approach in Russia and ignore the growth of risks. In our opinion, additional measures are appropriate.

However, the bank’s proposal seems to have hit a dead-end, seeing as Russian Finance Minister Ivan Chebeskov said it would be wiser to regulate the nascent asset class instead of banning it. According to him, banning crypto would cause Russia to lag regarding worldwide tech adoption. Chebeskov added that it is vital for Russia to give such technologies a chance to develop.

In the meeting, Putin assured lawmakers that the central bank does not stand in the government’s way when it comes to technical progress. He further defended the Bank of Russia, saying it is working on introducing the latest technologies.

While he did not vouch for an outright ban on crypto trading and mining, Putin agreed that the increasing use of cryptocurrencies comes with specific risks because of their inherent volatility.