In one report published on January 20, 2022, the Central Bank of Russia says it wants ban cryptocurrencies because they “threaten the well-being of Russian citizens and the stability of the financial system”. To be quite precise, the institution proposes to prohibit the “mining, as well as investments and payments in cryptocurrencies” in the country.
Russia: a new El Dorado for cryptocurrencies?
The Central Bank of Russia no longer hides its concerns about the rise of cryptocurrencies on its territory. The institution fears that this blockchain technology will reduce government control over the financial system and that it is not used by criminals to carry out ransomware transactions.
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In general, the Central Bank of Russia is concerned that the cryptocurrencies from being used in most illegal activities, such as money laundering, drug trafficking, or the financing of terrorism. The FSB is said to have put pressure on the governor of the Central Bank to go to war against cryptocurrencies.
In its report, the institution explains that Russian citizens have not missed the “boom” cryptocurrency investments. They carry out transactions with an estimated value of $5 billion (4.41 billion euros) per year with the various digital cryptocurrencies available in Russia. The country has even become a global hotspot for cryptocurrency mining.
Mining cryptocurrencies uses extremely powerful computers, consuming a lot of energy and giving off a lot of heat. Cold regions, where electricity is plentiful and cheap have therefore become new “eldorados”. This is for example the case of Eastern Siberia, which has seen the installation of many farms in recent years.
The Bank of Russia calls for a general ban
The institution does not see this very favorably. According to the Central Bank of Russia, cryptocurrencies are “volatile and create risks for investors”. What worries the Bank of Russia above all, it is the weakening of the financial system. Indeed, the widespread use of cryptocurrencies significantly reduces the government’s ability to pull levers to play on the economy.
The authors also mention the possibility that Russians may withdraw their savings from the classical circuit. They feel that “this would decrease the country’s ability to finance potential economic growth, thereby reducing the number of jobs and the potential for increased household income”. that’s why the Central Bank of Russia is in favor of banning cryptocurrencies.
The institution is not firmly opposed to the concept of digital currency and rightly advocates the establishment of a central bank digital currency (or MNBC). On the same model as the digital yuan in China. For the moment these are only recommendations, but the government could decide to act in the coming months. Since the publication of this report, the price of bitcoin has fallen by 8% in 24 hours, that of Ethereum by 9% and that of Litecoin by nearly 11%…