Bank of Russia to assess Bitcoin holdings volumes as $36M leave banks

Russia's central bank is trying to assess the amount of Bitcoin (BTC) in the hands of local investors amid a huge amount of money that does not return to banks after withdrawals fueled by the pandemic.

According to Elizaveta Danilova, director of the central bank's financial stability department, the Bank of Russia is surveying local cryptocurrency investors to estimate cryptocurrency investment volumes in Russia.

"We need to work both on data and on raising public awareness about the risks of such investments, which are not backed by anything," Danilova said in an interview with Reuters. published on the official website of the Bank of Russia on October 14.

The official argued that the cryptocurrency market lacks transparency not only in Russia but also in other jurisdictions, pointing to higher risks from cryptocurrency derivatives such as Bitcoin futures or exchange-traded funds. “The challenge is that the market is cross-border. People can invest in crypto through foreign intermediaries. Some of the major currency exchanges trade derivatives of cryptocurrencies that carry enormous risks, ”said Danilova.

The Bank of Russia's efforts to analyze local cryptocurrency investment volumes come amid Russians are unwilling to invest their money in banks recently. According to Danilova, not as much as 2.6 trillion rubles ($ 36 million) have been returned to banks after massive withdrawals in 2020 due to the COVID-19 pandemic.

Some existing data shows that investing in cryptocurrencies has become extremely popular in Russia. According to a survey by the Russian Forex Traders Association, up to 77% of Russian investors prefer Bitcoin to traditional investment instruments such as gold and forex.

Related: Russia does not plan to follow in China's footsteps by banning cryptocurrencies entirely, says deputy finance minister

Amid the growing popularity of cryptocurrencies, the Bank of Russia has urged the government to limit investments in cryptocurrencies by unaccredited investors, allegedly initiating a legal initiative to slow down transactions to crypto exchanges to avoid "emotional" purchases of crypto.

Despite the Bank of Russia's skeptical stance on cryptocurrencies, Russian President Vladimir Putin thinks that cryptocurrencies like Bitcoin work well for transferring funds around the world and could become a "means of accumulation" one day.