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Moscow could soon crackdown on cryptocurrency operations in the country, as Russia’s central bank released a damning 36-page proposal earlier this Thursday.
The protection of investors, financial stability and environmental concerns, the main regulator of the Russian financial markets proposed to prohibit the use and exploitation of cryptocurrencies in the country.
The Bank of Russia suggested the following changes to the legislation.
In the report, the bank suggested banning the use of crypto as a "means of payment for goods and services" in Russia.
In addition, the authority has advised to introduce "a ban of investments of financial organisations in cryptocurrencies and related financial instruments, and the use of russian financial intermediaries and russian financial infrastructures to conduct transactions with cryptocurrencies."
The authority also proposed prohibiting transactions aimed at buying or selling crypto for traditional currency–” a ban on organizing the issuance and circulation of cryptocurrencies (including crypto exchanges and P2P platforms) in the territory.”
"cryptocurrencies also have financial pyramidal aspects, because their price growth is largely underpinned by demand from new market entrants,' read the report, as the authority has voiced concerns that cryptography attracts investors with low levels of financial literacy.
In addition to concerns about investor protection and financial stability, the bank also cautioned against the active use of cryptocurrencies for settlement in illegal activities.
"the volume of transactions of russian citizens with cryptocurrency, some estimates suggest, reaches $5 billion a year," reads the report, stressing that russia is "amongst the leaders in terms of global mining capacity."
They also recommended a ban on mining.
While proposing a ban on all crypto-currency issuance, the bank recommended a ban on mineral exploitation in the country, arguing that the current scale and spread of mining in russia "creates unproductive power consumption – compromising the energy supply of residential buildings, buildings and social infrastructure companies, as well as the implementation of the environment programme of the russian federation."
Russia is the third biggest center for mining Bitcoin, following the US and Kazakhstan, according to data from the Cambridge Centre for alternative finance.
As a result of China's ban on mining, Russia emerged as one of the main migratory destinations, with its hashrate share rising from 6.8% to 11.2%.
Finally, the bank said it “plans to improve the system of regular monitoring of operations with cryptocurrencies, incl. to work together with the financial regulators of the countries, in which crypto exchanges are registered in order to receive information about the operations of Russian clients in foreign cryptocurrency markets.”
