Russia’s central bank has proposed outlawing all cryptocurrency operations in the country, one of the world’s biggest centres for mining digital tokens.
Under the draft proposals, published in a 36-page report on Thursday, Russia would ban all cryptocurrency issuance and operations, stop banks from investing in cryptocurrencies, block exchanging crypto for traditional currency, and introduce legal liability for using crypto in purchases.
“The breakneck growth and market value of cryptocurrency is defined primarily by speculative demand for future growth, which creates bubbles,” the central bank said in the report.
“Cryptocurrencies also have aspects of financial pyramids, because their price growth is largely supported by demand from new entrants to the market,” it added.
The proposal comes after a senior EU financial regulator told the Financial Times that the bloc should ban the mining method used to produce new bitcoin, an energy intensive practice referred to as “proof-of-work”.
Russia’s central bank also said crypto would increase already hot inflation by “limiting the sovereignty of monetary policy” and warned that it could be used “to service illegal activity”.
Russians made about $5bn in cryptocurrency transactions last year, according to the central bank. Russia also developed a thriving mining industry after China last year outlawed the practice. Cheap electricity prices and cold temperatures in eastern Siberia have been a boon to mining companies, which rely on vast data centres filled with fast computers.
Russia is the third largest cryptocurrency mining country, according to data from the Cambridge Centre for alternative finance, after the US and Kazakhstan. Huobi, one of the largest trading venues by volumes, said in September that Russian users account for 10 per cent of the company’s cash trading.
