As more and more governments start pushing against cryptocurrencies, the Russian central bank proposed banning the use and mining of cryptocurrencies on Russian territory on Thursday.
After arguing for years against crypto, stating that they could be used for money laundering and to fund terrorism, Russia eventually did give them legal status back in 2020 but at the same time banned their use as a means of payment.
Governments worry that cryptocurrencies’ volatile and decentralised nature can undermine their control over financial and monetary systems. In Russia’s case, their central bank is worried about crypto being a threat to financial stability, citizens’ wellbeing and their monetary policy sovereignty.
Banning a threat?
The central bank said that the speculated demand indicates a rapid growth in crypto in its report published Thursday. It also added that cryptos carry characteristics of a financial pyramid and can form bubbles in the market, threatening financial stability and citizens at the same time.
The bank further proposes preventing financial institutions from carrying out any operations with cryptocurrencies and wants to put systems into place to block any transactions for buying or selling crypto for fiat or any other traditional currency. The ban also includes any crypto exchanges operating in the country.
And the central bank is not only worried about losing control over finances as well. It also added that mining creates energy consumption issues as the computers used to mine crypto are often quite powerful. They require a lot of electricity to run, not to mention most of this electricity comes from fossil fuels.
The bank pointed to China’s blanket ban over all crypto transactions and mining, a move that left the market panicked as miners started selling off their hardware or went underground.