Russia To Ban Crypto As Global Crackdown Efforts Intensify

Russia&39s central bank has suggested a blanket ban on cryptocurrency usage and mining within the country, citing concerns of financial stability, individuals&39 well-being, and the nation&39s monetary policy autonomy. The action is the most recent in a worldwide cryptocurrency crackdown, as governments from various countries in Asia all the way to the United States are concerned that privately controlled and extremely volatile virtual currencies would threaten their authority over banking and monetary systems.

Why ban it?

For years, Russia has suggested that cryptocurrencies can be used to launder money or support terrorists, and it is not the only country to think this way either. It finally granted them legal status back in 2020, but prohibited their usage as a payment method. The central bank stated that speculative demand was principally responsible for cryptocurrencies&39 quick rise and that they exhibited features of a possible financial pyramid, hinting at future market bubbles endangering financial stability and the country&39s people.

As a result, the bank advocated prohibiting financial institutions from conducting any activities involving cryptocurrencies, and that procedures be devised to stop transactions involving the purchase or sale of cryptocurrencies for fiat currencies. Cryptocurrency exchanges are also included in the planned prohibition, although Binance CEO Changpeng Zhao has previously said that they are willing to work alongside the regulators to help legitimise the crypto industry.

Crypto mining and its future

The ban further targeted crypto mining, which it claimed harms the country&39s eco-friendly programme, jeopardises Russia&39s energy supply, and intensifies the negative impacts of cryptocurrency proliferation, providing incentives to avoid control and regulation. Russia is currently the world&rsquos third biggest cryptocurrency miner, so a ban on this could have catastrophic effects.

Many in the crypto community have viewed the proposed ban to mirror that of China&rsquos prohibition on cryptocurrencies and their usage, which also includes mining. In 2021, China&rsquos decision to ban crypto mining in various provinces had adversely impacted both the hash rate and the price of Bitcoin (BTC), which then resulted in massive price drops for numerous altcoins as well. Still, Russia appears to be a bit more lenient than China when it comes to crypto, so time will tell how the suggested ban will be put into effect and to what extent its consequences could be.