The Central Bank of the Russian Federation wants to ban cryptocurrencies
In a report submitted on January 20, the Bank of Russia proposes to ban cryptocurrency-related activities. One of the arguments given in the study is the negative impact of informal circulation on the conditions for conducting monetary policy.
“Cryptocurrencies: trends, risks, regulation” is the title of the report published on January 20 by the Bank of Russia. The most important theses of the document were presented at the conference by Elzhbeta Danilova, head of the financial stability department of the central bank.
According to the estimates presented in the report, the volume of transactions using cryptocurrencies made by Russian citizens reached $5 billion. The country is also one of the world leaders in computing power used in the process of “mining” cryptocurrencies. According to the authors of the study, tokens are of limited use in payments, and user activity is focused on speculative transactions.
The document indicates a number of risks associated with the development of a new segment of the financial market. High volatility and scam activity can pose a threat to individual investors. It is also expected that cryptocurrencies will compete with official money and, as a result, reduce the ability of the financial sector to fund investments. “Like dollarization, cryptocurrencies limit the sovereignty of monetary policy, which in turn could force the central bank to hold higher rates to curb inflation,” the report says.
In order to reduce the risks associated with the further popularization of cryptocurrencies, the Bank of Russia proposes to ban many types of activities, including making payments for goods and services (both by consumers and business entities), issuing and organizing circulation (including exchange ones), and investment in crypto assets by financial institutions.
The institution also called for a ban on the “mining” of cryptocurrencies. It was stated that it represented, inter alia, “Unproductive consumption of electricity”. The Bank of Russia announced more detailed monitoring of cryptocurrency transactions, as well as obtaining additional data on the activities of Russian clients of currency exchange platforms. At the same time, it was indicated that the bank does not support a ban on the possession of cryptocurrencies by individuals.
Bitcoin below $40k
The cryptocurrency market has been falling in recent weeks. On January 21, the price of Bitcoin was below 40,000 USD, close to the value last recorded in July 2021. Other popular cryptocurrencies, including Ethereum, also recorded double-digit declines throughout the day.