The Central Bank of Russia issued a report that proposed a ban on crypto trading and mining in the country.
First China – then Russia?
Bitcoin’s long list of enemies may have just gotten a bit longer.
After China banned the world’s biggest cryptocurrency last year for good, Bitcoin could be facing a similar fate in Russia. On January 20, the Russian central bank proposed a hardline stance that would see crypto trading and mining banned in Russia. This follows proposed stricter regulation in Russia, although no actual legislation has been passed just yet.
The report which was called “Cryptocurrencies: trends, risks, measures” advocates for a complete domestic ban of over-the-counter trading and crypto exchanges. Miners would also get axed, even though Russia has become one of the main hubs for crypto mining after miners had to flee China. The central bank also discourages private banks and institutional investors from getting involved with crypto assets, something that is likely to face opposition from the country’s numerous private banks.
According to the current version of the ban, possession of crypto assets or trading on international exchanges would still be possible. The regulator proposes introducing fiscal transparency and wants to have a better grip on private investors who may be dodging their tax burden. NFTs would also survive the ban as it is proposed now.
Russian finance sector split on proposed ban
Much of Russia’s security apparatus would not mind seeing cryptocurrencies outlawed as they undermine their grip on the country. Domestic stakeholders are less pleased.
Maksim Malysh, CEO of Kryptex, a mining platform, said that a mining ban was unlikely since it would result in a market breakdown. The largest Russian-owned mining pools are registered outside the country’s borders and cannot be touched. Also, exchanges would simply create mirror sites and could still easily be accessed with VPNs.
Andrey Mihaylishin, co-founder of Joys, a crypto payments system, cast doubt on the bill’s effectiveness to keep institutional investors away from crypto. A simple way to circumvent a ban would be opening accounts with Belorussian or Kazakh banks.
Pavel Durov, founder of Telegram, a highly popular messaging app, slammed the proposed ban and warned that “the development of blockchain technologies in general” would be destroyed this way, together with “a number of sectors of a high-tech economy.”
Even officials are not convinced a blanket ban is the best solution. Andrey Lugovoy, deputy chairman of the Committee on National Security and Anti-Corruption of the State Duma, suggested that regulation would be better than outlawing crypto. He questioned the CBR’s motives and stressed that many risky assets were part of people’s daily lives and that a simple “Ponzi argument” was less than sufficient for a ban.
No matter what path Russia eventually goes down, the country is set to remain an influential player in the crypto industry. With President Putin suggesting that Bitcoin could eventually replace the country’s dollar reserves to undermine the greenback’s hegemony as the world’s de-facto reserve currency, the door might still be open for Bitcoin to survive in Russia.
