On January 20, 2022, the Russian central bank proposed to crack down the cryptocurrencies.

Highlights

• If this move is adopted, it could disrupt the burgeoning virtual money sector because Russia is one of the largest crypto-mining nations worldwide.
• This proposal was made as Russian authorities have been criticising the cryptocurrencies for years, as these can be used for illegal activities. Authorities also called for regulation.
• The Bank of Russia called to reinforce the ban on cryptocurrency payments, put ban on cryptocurrency mining, as well as to tight laws on trading virtual money.

Legal status to cryptocurrencies in Russia

In Russia, authorities granted legal status to cryptocurrencies in 2020. However, their use in payments was never authorised.

• Using cryptocurrencies creates significant threats to well-being of Russian citizens as well to the stability of financial system.
• Swift growth of cryptocurrencies is driven by “speculative demand”, which ultimately leads to formation of “bubble”.
• Cryptos resemble financial “pyramid schemes”, since their value increases with emergence of new players in market.