Russian central bank report proposes banning the use and mining of cryptocurrencies on Russian territory

Russia, the world’s third-largest player in bitcoin mining, could ban using and mining cryptocurrency after a report by its central bank.

A visitor holds a Bitcoin (virtual currency) souvenir coin, during a webinar by a Russian businessman.

Russia’s central bank has proposed banning the use and mining of cryptocurrencies on Russian territory in a huge blow for the digital currency’s global legitimacy.

The central bank in Russia, the world’s third-largest player in bitcoin mining behind the US and Kazakhstan, cited threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty.

“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the report said. “This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy.”

“The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.

Russia has previously opposed cryptocurrencies, saying they could be used in money laundering or finance terrorism and that mining the digital currency created energy security issues.

However, the nation gave them legal status in 2020 but banned their use as a means of payment.

An employee inspects machines for the production of bitcoins.

In the report, the central bank recommended Russia implement new laws and regulations that effectively ban any crypto-related activities in the country.

However, unlike in China, the ban would not apply to assets held abroad by Russians and those with offshore bank accounts will be able to trade crypto.

Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China have all banned cryptocurrency.

In also proposed extending an existing ban on using crypto for payments and suggested punishing Russians buying or selling goods using cryptocurrency.

The Bank of Russia said that Russians conduct over $5 billion worth of crypto transactions in a year, but did not clarify how this number was calculated.

In December, the price of bitcoin fell after Reuters reported, citing sources, that Russia’s regulator was in favour of a complete ban on cryptocurrencies.

The price of bitcoin and other cryptocurrencies was largely unchanged following the news with the markets having already priced in an unfavourable ruling in Russia.