Cryptocurrencies Carry Systemic Risks, Threaten Ruble, Bank of Russia Insists

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Cryptocurrencies Carry Systemic Risks, Threaten Ruble, Bank of Russia Insists – The growth of cryptocurrencies poses serious risks to Russia’s financial stability, economy, and national currency, according to the monetary authorities in Moscow. In a new report released as the Russian government prepares to regulate the crypto realm, the central bank maintained its firm position on decentralized digital money.

The Central Bank of Russia has stated in its annual report for 2021 that Russians’ rising interest in cryptocurrencies, their considerable crypto investments, and the significant risks associated with crypto activities pose serious systemic dangers.

The monetary authority stated, in addition to a broad list of previously highlighted disadvantages associated to digital currencies like bitcoin, that:

“There is a risk of hurting money circulation and losing national currency sovereignty.”

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Also Read: Study Finds 33.4 Million Nigerian Adults Hold or Have Traded Crypto in Last 6 Months

The regulator is reiterating previous warnings that digital assets raise the risk of funds flowing out of the established financial system and into the mostly unregulated crypto market. According to the CBR, which was quoted by RBC Crypto, this transfer of savings jeopardizes the financial stability of Russian institutions.

The Bank of Russia is still concerned about the “well-being of citizens,” as it sees the crypto market’s expansion as forming a bubble, with cryptocurrencies resembling financial pyramids. Investor safety is inadequate, and investments in digital currency can be lost as a result of market fluctuation, cyberthreats, and fraud according to the CBR.

The study comes after the central bank proposed a ban on crypto activities in January. Other government entities reacted angrily to its tough proposition.

The CBR proposed legislation limiting the use of cryptocurrency in February. However, it is unlikely to receive traction because a rising number of authorities in Moscow regard crypto assets as a way to get through Western sanctions imposed in response to Russia’s invasion of Ukraine.

With the exception of bitcoin payments, the Ministry of Finance has been leading efforts to legitimize cryptocurrency operations, and it just resubmitted its new bill “On Digital Currency” to the federal government, which supports its approach. Crypto mining is presently regulated under clauses in the proposed law. However, the Bank of Russia recently indicated that it may allow this industry’s legalization.

Also Read: India’s Crypto Trading Volume Plunges Further as Mobikwik Stops Payment Service

Based on certain estimates, the number of crypto transactions done by Russian residents topped $5 billion last year, according to the central bank.

The regulator has admitted that Russians have been actively trading on digital asset exchanges and that their country is among the world’s leaders in terms of digital coin-minting capability.

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