Cryptocurrencies have been under major regulatory scrutiny in recent times, as Russia has become the latest country to consider placing an outright ban against the asset class.
According to a report titled “Cryptocurrencies: trends, risks, measures,” that was shared during an online conference with Elizaveta Danilova, the director of the Bank of Russia’s Financial Stability Department, the country’s apex bank is calling for a total ban on cryptocurrencies.
The regulators cited concerns that cryptos are not only volatile but are mostly used as payments to facilitate illicit transactions, such as money laundering and terrorist financing.
In addition, the Bank of Russia’s report stated that allowing residents to cash out their money from the economy using digital currencies could undermine the task of regulators in defending the country’s monetary policy.
Russia’s Proposed Crypto Laws
The Bank of Russia suggested in its report that new laws that prohibit crypto-related activities in the country need to be established, to protect its existing financial policies.
Per the report, the ban should focus on institutions that aid the circulation of cryptocurrencies in Russia, which include cryptocurrency exchanges and peer-to-peer (P2P) trading, among others.
Furthermore, the Bank of Russia’s report stated that the existing ban that forbids cryptocurrencies from being used in payment for goods and services should be reinforced.
The report also says institutional investors should be forbidden from investing in cryptocurrencies, adding that a penalty needs to be meted out on mutual funds that continue to pursue investments in digital currencies despite being banned in the past.
Cryptocurrency mining was not spared. According to the Bank of Russia, the activity should be banned because it stimulates the demand for other crypto services, as well as negatively affects Russia’s electricity supply.
The Central Bank of Russia’s report also says that Russians’ crypto activities across offshore exchanges will be monitored to obtain relevant information.
Russia’s Solution to Address Payment Needs
Interest in cryptocurrencies has surged recently because the asset class possesses the ability to make payments fast, cheap, and efficient.
While this has been a major concern for global regulators, several countries, including Russia, have made significant efforts to develop their own Central Bank Digital Currency (CBDC) to meet citizens’ demands.
In its most recent report, the Bank of Russia said it would enhance its current banking infrastructure and hastily introduce its CBDC, which would enable Russians to make fast and cheap payments.
Furthermore, the Bank of Russia plans to replace residents’ cryptocurrency appetite for investment purposes with the proposed digital assets the Russian government is planning to introduce.
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