Russia Proposes Ban On Use And Mining Of Cryptocurrencies – On Thursday, Russia’s central bank suggested prohibiting the use and mining of cryptocurrencies on Russian soil, citing concerns to financial stability, individuals’ well-being, and the country’s monetary policy autonomy.
The action is the most recent in a series of international cryptocurrency clampdowns, as governments from Asia to the United States worry that privately managed and highly volatile digital currencies would undermine their control over banking and monetary systems.
Russia has been a vocal opponent of cryptocurrencies for years, arguing that they can be used to launder money or fund terrorists. They were given legal status in 2020, and their use as a mode of payment was forbidden.
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In a report released on Thursday, the central bank warned that speculative demand was solely accountable for cryptocurrencies’ rapid growth and that they had characteristics of a financial pyramid, citing the risk of market bubbles jeopardizing financial stability and citizens.
The bank proposed preventing financial institutions from engaging in cryptocurrency transactions and recommending that procedures be put in place to prevent the acquisition or exchange of cryptocurrencies for fiat currencies.
Crypto exchanges are included in the proposed prohibition. Binance, a cryptocurrency exchange, told Reuters that it had been committed to working with regulators and hoped that the study’s release would prompt a discussion with the Russian central bank about safeguarding crypto users’ interests.
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Crypto Mining
Russia is the world’s third-largest bitcoin mining country, after the United States and Kazakhstan, but the latter may see a miner exodus as a result of concerns about harsher regulation following recent upheaval.
According to the Bank of Russia, cryptocurrency mining is producing issues with energy use. Bitcoin and other cryptocurrencies are “mined” by powerful computers vying against others connected to a global network to solve complex mathematical riddles. It frequently run on fossil fuels and the process consumes a lot of electricity.
The bank stated, “The best option is to impose a ban on cryptocurrency mining in Russia.”
The central bank, which plans to issue its own digital rouble, claims that the widespread adoption of crypto assets will constrain monetary policy sovereignty, which will require a higher interest rates to keep inflation under control.