Russia, one of the world’s most crypto influential nations, announced its intentions to regulate these digital currencies. The Russian Central Bank recently proposed a ban on crypto mining and trading within its borders. Citing threats that could affect financial stability and citizens’ wellbeing.
The global cryptocurrency craze has gone too far. Governments are getting scared of how privately operated and highly volatile digital currencies could challenge their control over financial systems with all those crazy price fluctuations from Asia to America.
Russia has long opposed cryptocurrencies, arguing that one could use them for money laundering or finance terrorism. So in 2020, Russia gave legal status to these currencies but banned their use as payment methods. The action was that the Russian ruble couldn’t keep up with inflation rates at this time (around 13%).
The Central Bank of Russia has issued a report warning about the risks associated with cryptocurrency speculation. The bank’s concerns focus on potentially overheating markets and citizens. Additionally, potential bubbles in crypto could cause significant disruptions to financial stability worldwide.
The recent ban on cryptocurrencies in Russia, including exchanges, has made headlines. However, Crypto exchange Binance told Reuters it was committed to working with regulators and hoped that the report’s release would spark a dialogue between central bank officials over protecting Russian cryptocurrency users’ interests as well.
The head of Russia’s central bank also said that they do not plan on implementing any restrictions regarding cryptocurrency ownership.
As per estimates, Russia’s annual crypto transaction volume is almost $5.00 billion.
Is Russia Following China?
The Russian Central Bank announced that they would collaborate with regulators worldwide to collect Russian client operations information from the crypto exchanges. Pointing out past examples such as China, allowing local governments strict control over virtual currency activities despite criticism against said measures.
China has ramped up its crackdown on cryptocurrencies in recent months. In September, they banned all crypto transactions and mining with a blanket ban. The ban hit Bitcoin hard and other major coins forcing investors out of the market.
Ban On Crypto Mining Due to High Energy Consumption
Russia, the world’s third-largest player in Bitcoin mining behind America and Kazakhstan, may see a miner exodus over fears of tightening regulation following unrest earlier this month.
Russia’s Central Bank said powerful computers mines Bitcoin and other cryptocurrencies by powerful compete against each other to solve complex mathematical puzzles. The mining process uses vast amounts of electricity generated from fossil fuels or nuclear physics.
“To save the energy resources, we need to propose a ban on crypto mining,” said the bank authorities.
Featured image from Pixabay, chart from TradingView.com