It was recently reported that the Russian Central Bank had sent a proposal to the government of Russia intending to ban all forms of crypto-related transactions within the country.
The proposal specifically pointed out that crypto being a very high volatile asset class should be banned. Along with that, all forms of crypto transactions such as trading, mining, exchanges, OTC desks, P2P transfers, and usage of cryptocurrencies in any way should be deemed illegal. Plus, they even clarified that not only individuals but also companies or organisations would be legally penalised, if found investing or connected to crypto in any way.
What are the major reasons for this crypto ban proposal?
First of all, the Central bank doesn’t want crypto to become mainstream as that would mean that crypto would become a major part of the Russian economy. The main issue is as crypto is volatile, a major pump or dump could destabilise the whole Russian economy.
Secondly, Russia wants to follow in the steps of China and promotes its own CBDC, the digital Ruble which is set to start trial this year. The reason for proposing a crypto ban is quite clear as with crypto around, the digital Ruble won’t be able to become mainstream. Further, the government wants the digital Ruble to succeed over crypto as it’s designed upon their own custom Blockchain, also known as private Blockchain which can be easily tracked over crypto.
Thirdly, based on inside reports even the Federal Security Bureau of Russia (FSB) has advised the Central bank to ban crypto as crypto being hard to track is really a big issue for them. The FSB believes that it is actively used for terrorist financing and other illegal stuff in the country. Further, it is also used to support anti-government entities that even includes the media which the FSB wants to track and stop.
What will Russia lose from banning crypto?
Well, it’s of no surprise that the government would have a hard time imposing the ban as there is about $92 billion worth of digital assets circulating in the Russian economy. A sudden ban would indicate a sudden removal of $92 billion from the economy which could be catastrophic.
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