We’re aware that many people have been wondering about what is happening with cryptocurrency in Russia. While the United States and some other countries are now embracing crypto, Russia is trying to ban it. However, what are the reasons for the ban? We’re here to tell you all about it.
Is Cryptocurrency Banned in Russia?
For now, Russia has not banned cryptocurrency. However, Russia's central bank on Thursday, 20th January, proposed a blanket ban on domestic cryptocurrency trading and mining.
Following the announcement, Bitcoin dived 10% to $38,900 and Ether fell 13% to $2,790. In addition, alt-coins including Solana, Cardano, Polkadot, Terra, and Avalanche were similarly down.
The central bank proposed three amendments to the nation's existing legislation:
- Ban crypto as a means of payment for goods, works and services.
- Prohibit the organization and issuance of crypto (including by cryptocurrency exchanges, cryptocurrency exchange offices, and P2P platforms).
- Ban financial institutions from investing in crypto.
In concussion, cryptocurrency isn't banned in Russia. However, should proposed amendments are adopted, it will be illegal.
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Why Russia Wants to Ban Crypto?
The report by the Russian Bank claims that the growing use of cryptocurrencies poses a threat to the stability of the financial system and the sovereignty of monetary policy. Moreover, the authorities believe that cryptocurrency could be used in money laundering or to finance terrorism.
The Bank of Russia urged to prohibit cryptocurrency mining. This is because the activity is considered a waste of electricity.
Cryptocurrency mining creates unproductive consumption of electric power, which threatens the power supply of residential buildings, social infrastructure and enterprises and the implementation of Russia’s environmental agenda.
The Central Bank of Russia
In addition, mining creates the demand for infrastructure needed to conduct cryptocurrency transactions. This, in turn, exacerbates the negative effects of the spread of cryptocurrencies.