English
Chinese (Simplified)
French
German
Italian
Polish
Russian
Spanish
Turkish
Ukrainian
The proliferation of cryptocurrencies poses significant risks to the Russian economy, financial stability and national fiat, monetary officials in Moscow reiterated. The Central Bank reiterated its tough stance on decentralized digital money in a new report released as the government prepares to regulate Russia’s cryptospace.
Central Bank of Russia Warns of Cryptocurrencies
The growing interest of Russians in cryptocurrencies, their significant crypto-investments, and the high risks associated with crypto transactions pose potential systemic threats, the Central Bank of Russia (CBR) indicated in its annual report for 2021. Expanding on a long list of previously noted negatives associated with digital currencies such as bitcoin, the monetary authority stated
There is a risk of undermining monetary circulation and losing the sovereignty of the nation’s currency.
The regulator reiterates earlier warnings that digital assets increase the risk of funds flowing out of the traditional financial system into the still largely unregulated crypto market. This transfer of savings threatens the financial stability of Russian banks, the Central Bank said in a statement cited by RBC Crypto.
The Bank of Russia remains concerned about the “welfare of citizens,” as it believes the growth of the crypto market is forming a bubble, and cryptocurrencies have the characteristics of financial pyramids. Investor protection is limited, and investments in digital coins could be lost due to price volatility or due to fraud and cyber threats, the CBR adds.
The report comes after the central bank proposed in January to ban most cryptocurrencies. Its tough proposal met resistance from other government agencies. In February, the Central Bank presented a bill banning cryptocurrencies. However, it is unlikely to gain support as a growing number of officials in Moscow see an opportunity to use crypto-assets to circumvent Western sanctions imposed in the wake of Russia’s invasion of Ukraine. The
Treasury Department is leading efforts to legalize cryptocurrency transactions other than bitcoin payments, and recently resubmitted its new Digital Currency Bill to the federal government, which supports its approach. The bill includes provisions regulating cryptocurrency mining. Meanwhile, the Bank of Russia has also said it may agree to legalize the industry.
The central bank also notes that according to some estimates, the volume of cryptocurrency transactions made by Russian residents reached $5 billion last year. Russians are actively trading on digital asset exchanges, and their country is among the world leaders in the volume of digital coin mining, the regulator acknowledged.
Image Credits: Shutterstock, Pixabay, Wiki Commons
