Russia wants to ban the issuance, mining and circulation of cryptocurrency

01 February, 2022

The Central Bank proposed to ban the issuance, mining and circulation of cryptocurrency in Russia. In his opinion, cryptocurrency mining carries risks for the Russian economy and financial stability.

The Bank of Russia proposed to introduce a ban on the issuance, mining and circulation of cryptocurrencies in Russia on 20  January 2022. This is stated in the report of the regulator "Cryptocurrencies: trends, risks, measures".

"The status of the Russian ruble, which is not a reserve currency, makes it impossible to apply a soft approach in Russia and ignore the increase in risks. In our opinion, additional measures are appropriate," the document says.

So, "in order to reduce the threats caused by the spread of cryptocurrencies", the Bank of Russia proposes to amend the legislation that are related to the ban on organizing the issuance and/or issuance, organizing the circulation of cryptocurrencies on the territory of the Russian Federation, as well as establishing liability for violating this ban.

However, this proposal met with widespread criticism from the IT community. Blockchain technologies are actively developing all over the world and many countries are already adopting progressive laws in this area, so this kind of ban can lead to an outflow of specialists from the country and the impossibility of implementing state projects in the field of blockchain. 

Many studies show that only a small percentage of cryptocurrencies are involved in illegal transactions. At the same time, the introduction of such a ban will inevitably slow down the development of blockchain technologies in general. These technologies improve the efficiency and safety of many human activities, from finance to the arts.

The Ministry of Finance of the Russian Federation also opposes a complete ban on cryptocurrencies, since, in its opinion, the complete absence of regulation of cryptocurrencies or their ban will lead to destabilization of the industry, an increase in the share of the shadow economy and an increase in fraud cases, and law enforcement agencies will not be able to effectively respond to crimes using cryptocurrencies. The Ministry of Finance has prepared a concept for regulating cryptocurrencies in Russia without their prohibition: the department proposes to carry out all transactions with cryptocurrencies through Russian banks, identify holders of crypto wallets and divide customers into qualified and unqualified investors.

The discussion on this issue is currently ongoing.