In a report published on Thursday, the Russian Central Bank called for a blanket ban on trading and mining of domestic cryptocurrencies.
The report titled "Cryptocurrencies: Trends, Risks, Measures" compares cryptocurrencies to a Ponzi scheme and calls for a complete ban on their use throughout Russia. The authors claim that cryptocurrencies are highly volatile in nature and are used as a tool for illegal activities. The report also warned that cryptocurrencies could pose a risk to financial sovereignty and could help people take money out of the national economy. The report said:
"The potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including Russia."
The Russian central bank demanded a complete ban on over-the-counter (OTC) trading desks, crypto exchanges, and peer-to-peer exchanges. The report also called for reinforcing the ban on crypto payments and the introduction of strict punishment for any violation.
The central bank report further proposes a complete ban on crypto mining in the country, claiming that mining activities create new supply that generates demand for other crypto services such as exchanges. Crypto mining could undermine the existing green energy agenda and also disrupt Russia's energy supply. The official newspaper said:
"Crypto mining creates unproductive electricity expenditure, which undermines the energy supply of residential buildings, social infrastructure and industrial objects, as well as the environmental agenda of the Russian Federation."
Russia became the third largest Bitcoin (BTC) mining hub following China's crypto mining ban in May. If acted upon, the latest proposal for a blanket ban on crypto mining in the country could lead to another realignment on the global crypto mining map.
According to a Bloomberg reportRussia's Federal Security Service (FSB) was instrumental in promoting the ban, having pressured the central bank's governor, Elvira Nabiullina, to follow a hard-line course. The report states that the FSB is concerned about the increasing number of untraceable funds to opposition parties and media via crypto.
The report is framed as an invitation to public discussion, with a deadline for comments and suggestions from interested parties set for March 1, 2022.
Related: Russia Prioritizes CBDC Ruble as Overall Crypto Outlook Looks Positive
Russia's central bank has been skeptical of cryptocurrencies for quite some time. However, what could be seen as signs of President Vladimir Putin's interest in and understanding of crypto led some to believe that the Russian government might choose to regulate the decentralized industry rather than ban it.
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