In a report submitted on January 20, the Bank of Russia proposes banning crypto-related activities. One of the arguments cited in the study is the negative impact of informal trading on the terms of monetary policy practice.
“Cryptocurrencies: trends, risks and regulations” – this is the title of the report published by the Bank of Russia on January 20. The document’s most important theses were presented at the conference by Elżbieta Daniłowa, Head of the Financial Stability Department of the Central Bank.
According to estimates in the report, the volume of cryptocurrency transactions made by Russian citizens amounted to $5 billion. The country is also one of the world leaders in terms of computing power used in the process of “mining” cryptocurrencies. As noted by the authors of the study, tokens have a limited use for payments, and user activity is focused on speculative transactions.
The document lists a number of risks related to the development of a new segment of the financial market. High volatility and fraudulent activity can pose a threat to individual investors. Cryptocurrencies are also expected to compete with official money and, as a consequence, reduce the ability of the financial sector to fund investments. “Like dollarization, cryptocurrency restricts the sovereignty of monetary policy, which in turn may force the central bank to maintain higher rates to contain inflation,” the report said.
In order to reduce the risks associated with the increased promotion of cryptocurrencies, the Bank of Russia proposes a ban on many types of activity – including dealing with payments for goods and services (by consumers and business entities), issuing and regulating trading (including exchanges) and investing in crypto-assets from by financial institutions.
The foundation also called for a ban on “mining” cryptocurrency. It was pointed out that it constitutes, inter alia, “unproductive consumption of electricity”. The Bank of Russia announced more detailed monitoring of cryptocurrency transactions, as well as obtaining more data on the activities of Russian customers of foreign exchange platforms. At the same time, it was noted that the bank does not support a ban on cryptocurrency ownership by natural persons.
Bitcoin is under 40 thousand dollars
The cryptocurrency market has experienced a decline in recent weeks. On January 21, the price of Bitcoin was below 40,000. The US dollar, close to the value last recorded in July 2021. Other popular cryptocurrencies, including Ether, recorded double-digit declines during the day.
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