Russia, Central Bank wants to ban cryptocurrency investments
Russia, Central Bank wants to ban cryptocurrency investments
Regulation

Russia, Central Bank wants to ban cryptocurrency investments

By Eleonora Spagnolo - 28 Dec 2021

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The Central Bank of Russia is reportedly speculating about blocking investments in Bitcoin and cryptocurrency by preventing transfers from cards to cryptocurrency exchanges. 

The hypothesis was put forward by Forbes.

Russia’s plans to block investments in Bitcoin and cryptocurrency 

According to reports, the Russian Central Bank is considering several options to curb investments in cryptocurrencies, one of which is blocking credit card payments to exchanges. The procedure would be quite simple; it would be enough for banks to prohibit transfers to institutions with the MCC code (a four-digit code) corresponding to cryptocurrency exchange activities.

At the moment, however, everything remains in the field of hypotheses.

What is certain is that the Central Bank of Russia seems really determined to put a brake on the circulation of cryptocurrencies. The Bank would be preparing a report to submit to regulators highlighting the risks of cryptocurrencies for the stability of the financial system. 

The point is that any initiative of the Central Bank will have to go through the Duma, the Russian parliament. At the moment, a working group on cryptocurrencies has been formed with the task of arriving at a regulation. 

The first step could be to prohibit Russians from buying or trading cryptocurrencies from domestic companies. In practice, Russians who want to trade cryptocurrencies will have to turn to foreign exchanges. This hypothesis was put forward by Russian Central Bank Vice President Vladimir Chistyukhin, who explicitly admitted that:

“We do not see a place for cryptocurrency in the Russian financial market.” 

Bitcoin russia
The Russian Central Bank could block transfers from credit cards to crypto exchanges

The transition to the digital ruble

Probably, the Russian Central Bank’s hostility towards Bitcoin and cryptocurrencies is due to the work it is carrying out for the issuance of the digital ruble. Apparently, the first tests are underway, which would make Russia the second major state, after China, to issue its own CBDC. 

Perhaps the Russian Central Bank simply wants there to be room in the country for only one digital currency, the national one, at the expense of private or decentralized initiatives.

President Putin’s opinion

However, there are those in Russia who see potential in cryptocurrencies: it is President Vladimir Putin. Already on a couple of occasions, the Kremlin leader has admitted that cryptocurrencies have a right to exist while stressing the risks associated with volatility. Probably in the future, they could be used to trade energy sources such as oil. This thesis is a trip to the United States because this would undermine the US dollar. According to Putin, it is still too early to talk about it, but nothing excludes that something like this could happen soon.  

Russians like cryptocurrencies

Regardless of trading, it should be kept in mind that Russia has become one of the favorite shores for miners. After the ban on Bitcoin mining in China, BTC production has also moved to the vicinity of Moscow and St. Petersburg. The confirmation comes from the number of devices sold. 

According to several reports, Russians have invested 5 trillion rubles in cryptocurrencies, a figure that corresponds to $68 billion.   

In short, it seems that despite the hostility of the Central Bank, the Russians like cryptocurrencies. Future regulation will have to take this into account.

Eleonora Spagnolo

Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.

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