Russian Central Bank Suggests Banning Cryptocurrencies

In a paper discussing the role of cryptocurrency in the Russian financial sector, the country’s central bank proposed a ban on its usage, trading and mining.

The call came from a paper published earlier today, ‘Cryptocurrencies: Trends, Risks, Measures,’ presented at an online news conference with the head of the Bank of Russia’s Financial Stability Department, Elizaveta Danilova. 

In addition to being volatile, the paper said cryptocurrencies are frequently used for criminal operations like fraud and money laundering. They provide an outlet for individuals to take their money out of the national economy, which risks weakening it, the paper says.

Ban suggestions

Consequently, the paper recommends new legislation and regulations that would prevent any crypto-related business in the country. This would include a ban on places to trade crypto, including exchanges, over-the-counter trading desks, and peer-to-peer platforms. In order to prevent Russian institutional investors from integrating cryptocurrency into the country’s financial sector, they should also be discouraged from utilizing cryptocurrencies. 

The paper also emphasized strengthening existing restrictions on the use of cryptocurrency for payments. It suggested penalties should be put in place for Russian people and enterprises that purchase or sell products, services, or labor using cryptocurrency. In these efforts, Russia’s central bank intends to monitor cryptocurrency transactions carried out by Russian citizens abroad by collaborating with countries with cryptocurrency exchanges.

The monetary authority believes that the present banking infrastructure will be improved with the introduction of the digital ruble. The central bank digital currency (CBDC) is currently under development by the Bank of Russia. It hopes to meet the future needs of Russians for rapid and inexpensive digital payment, providing the benefits of cryptocurrency without the risks.

Previous suggestions

The central bank had made previous suggestions about banning cryptocurrencies in Russia. Earlier, Deputy Chairman of the Central Bank, Vladimir Chistyukhin, hinted that privately operated cryptocurrencies could be phased out.

“I think we will publish a report on cryptocurrencies in the near future. This report will contain our approaches to the place for cryptocurrency we see in the Russian financial market,” said deputy chairman of the Central Bank. “I give a hint – we do not see a place for cryptocurrency in the Russian financial market.” 

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