The central bank of Russia believes that crypto can harm the sovereign currency of the country.
On Thursday, the Russian central bank called for a ban on cryptocurrencies.
The report titled “Cryptocurrencies: trends, risks, measures” was presented at an online press conference by Elizaveta Danilova, the director of the Central Bank of the Russian Federation’s (CBF), Financial Stability Department.
Crypto Can Harm Economy
In the report, it is argued that cryptocurrencies are volatile and can be used for illicit activities like money laundering and terror financing.
Moreover, they present an option to bring money out of circulation from the country’s economy which can undermine the country’s sovereign currency.
Other than that, it is noted that some cryptocurrencies are concentrated in the hands of few. Consequently, those cryptocurrencies can be manipulated.
That’s why the central bank has called for legislation to ban crypto and associated activities.
But the bank is not suggesting banning ownership of crypto by private citizens, Danilova said.
Cryptocurrency exchange Binance told Reuters it was committed to working with regulators.
Russians have an annual transaction volume of about $5 billion, the bank said.
Ban on Crypto Mining
CBF has also expressed its disapproval of crypto mining on the argument that it has a huge carbon footprint. Moreover, the amount of energy it consumes also undermines the country’s social infrastructure.
The “optimal solution” is to ban crypto mining, the report reads.
According to data from the Cambridge Bitcoin Electricity Consumption Index, Russia contributes 11% to the global Bitcoin hash rate.
Considering the country’s big chunk of contribution to the Bitcoin network, this negative news for the industry might be the reason markets plunged on Friday. At press time, Bitcoin is trading for approximately 38000 USDT on Binance.
Crypto regulation will be one of the most important moments in any country’s economic history because it opens the floodgates to a whole new industry. Furthermore, the industry provides a new class of assets.
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