The Russian Central Bank prepared report, in which he advocated a complete ban in the country of mining and transactions with cryptocurrencies. The regulator insists that such assets entail significant risks for the Russian financial market.
The Central Bank claims that citizens can lose investments, the cryptocurrency itself is similar to pyramids, because it depends on the information background, and exchanges “often become targets of hacker attacks.” The regulator believes that cryptocurrencies are dangerous for the ruble: people will start actively buying them, capital outflow will begin, and the ruble will weaken. At the same time, the Central Bank does not plan to prohibit Russians from storing digital assets and acquiring them on foreign sites.
Yielded to persuasion
According to Bloomberg, the Federal Security Service (FSB) persuaded the Chairman of the Central Bank Elvira Nabiullina to support the introduction of a complete ban on transactions with cryptocurrencies. The reason that in Russia they took up arms against cryptocurrency was the increase in payments in favor of opposition organizations, which are considered undesirable in the country.
According to the agency’s calculations, there are now about 7 trillion rubles in the accounts of 17 million crypto wallets in Russia. Opposition funding is a very small part of this amount, but the FSB expects the situation to worsen. The security forces are afraid that Russians will use this channel more often, and transfers are not tracked there. In the service itself, they did not give comments on this matter. The Central Bank also did not comment on the information about the persuasion of the FSB, although the proposal for a ban was officially released after Bloomberg data appeared.
After that, the Central Bank proposed to ban the issuance, circulation and exchange of cryptocurrencies. It will also affect crypto exchanges, exchangers and P2P platforms. In addition, the Bank of Russia proposes to introduce a ban on investments in cryptocurrencies for financial institutions, as well as to exclude the use of the infrastructure of the Russian financial market for any operations with digital currency.
At the moment, both citizens and companies in Russia can buy cryptocurrency in foreign markets: only the issuance of tokens on domestic platforms and their use as a means of payment is prohibited in the country. As a result, the Russian financial infrastructure can be used to buy cryptocurrencies in two cases: when individuals make transfers through their account in a Russian bank in favor of crypto exchanges, and also when financial companies offer investors to buy products where cryptocurrencies are the underlying asset. In addition, Russian banks can now invest in digital currency. The Central Bank proposes to deprive the Russians of all these opportunities.
We do not propose to impose a ban on the possession of cryptocurrencies by citizens. This is, of course, possible to do in foreign jurisdictions.
Elizabeth DanilovaDirector of the Financial Stability Department of the Bank of Russia
At the same time, Elizaveta Danilova, director of the financial stability department of the Bank of Russia, clarified that the citizens themselves would not be prohibited from owning cryptocurrencies. Russians will be able to buy them in foreign jurisdictions. However, the regulator considers it necessary to organize information exchange between the Federal Tax Service (FTS), the Central Bank and Rosfinmonitoring. For example, information exchange with the Federal Tax Service will help to establish that a person owns a cryptocurrency. According to the Central Bank, the authorities also need to ensure regular receipt of information about the purchases of cryptocurrency by Russians from foreign payment systems (foreign payment systems already label such operations, the Central Bank recalled).
7trillion rubles
is on the accounts of 17 million crypto wallets in Russia
For the use of cryptocurrencies as a means of payment in Russia, the Central Bank wants to introduce liability, but the punishment has not yet been determined. The representative of the regulator clarified that the issue is still being discussed and, probably, these will be fines, notes TASS. Changes to the legislation promise to prepare in the coming months.
Now Russia is in third place in the world in terms of cryptocurrency mining. The country’s share in global production almost doubled from September 2019 to August 2021, from 5.9 percent to 11.2 percent. The annual volume of transactions with cryptocurrencies in Russia is estimated at five billion dollars – about the same amount as Russians have invested in foreign shares.
The current scale and further spread of cryptocurrency mining in Russia carries significant risks for the economy and financial stability
Central Bank of Russia
Despite the popularity of the market, the Central Bank has long been talking about its potential danger. “You know our attitude towards cryptocurrencies, to put it mildly, is skeptical, these are big risks for retail investors due to high volatility, cryptocurrencies are often used for illegal operations, of a criminal nature, they are not transparent,” Nabiullina said and specified that the regulator has tools to limit cryptocurrencies, and the Central Bank thought about a ban on the purchase of crypto assets at the end of 2021.
The regulator has already become interested in the transfers of Russians in favor of crypto exchangers. The Central Bank is sure that this creates financial risks for the Russians and they will be involved in fraudulent schemes.
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