What just happened? Russia has offered to follow China in coming down hard on cryptocurrency. The country’s central bank has suggested banning the use and mining of crypto in its territories, fearing it could harm Russia’s financial system and environment.
Elizaveta Danilova, Director of the Financial Stability Department of the Bank of Russia, presented “Cryptocurrencies: Trends, Risks, Measures” report during an online press conference.
The report states that the cryptocurrency bears many similarities to a pyramid scheme and is often used in criminal activities. It also undermines the sovereignty of monetary policy by offering citizens a way to withdraw their money from the national economy.
The report goes on to say that crypto mining harms Russia’s green agenda, poses a risk to its energy supply, and can compound the adverse effects of the spread of cryptocurrency.
“The potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including Russia,” the central bank said.
Payments using crypto are already banned in Russia and mutual funds are not allowed to invest there. Yet, the country is still the third largest crypto mining country in the world behind the United States and Kazakhstan.
While the bank isn’t proposing to make it illegal to own cryptocurrency, it wants tougher penalties for those who break current rules and calls for new laws to ban the use of crypto. As for mining, the report says the “optimal solution” would be to ban it altogether in Russia.
It should also be noted that people with offshore exchange accounts could still trade cryptos, and any bans must first be passed into law.
The price of Bitcoin has fallen from around $43,200 to just under $39,000 in the past 24 hours.