Russia’s top lawmakers have confirmed that the country could implement a ban on cryptocurrencies starting September 1. Anatoly Aksakov, the Chairman of the State Duma Committee on the Financial Market, told NSN that lawmakers would vote on a potential cryptocurrency ban in the next coming weeks.
Following China’s footsteps, Russia could be the next country to impose a ban on cryptocurrencies.
According to Aksakov, the ban will primarily target the circulation of cryptocurrencies, while certain digital financial assets issued within Russian jurisdictions will be exempted, including specific digital coins issued by Russian banks and the Central Bank’s digital ruble project.
For now, the potential ban’s impact on cryptocurrency use in Russia remains uncertain, but it is expected to negatively affect the country’s cryptocurrency market.
Russia Looks Worse All The Time
The proposed legislation will include provisions exempting cryptocurrency miners and experimental projects sponsored by the Central Bank within a trial legal framework, which is supported by Elvira Nabiullina, Head of the Bank of Russia.
Meanwhile, ongoing discussions around cryptocurrency regulation among Russia’s lawmakers show divergent views. While the Central Bank has supported a more stringent approach, even proposing a total ban similar to China’s, some ministries have advocated for more moderate regulation, like those in Western countries.
Anton Siluanov, Russia’s Finance Minister, opposes a total crypto ban, advocating for regulations to enable their use domestically and internationally while Artem Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy, said it’s necessary to adopt clear and specific regulations.
However, the bill seems to accommodate both perspectives, allowing for certain concessions, particularly for miners and mining pools supervised by the Central Bank.
Despite concerns about the potential impact on Russian crypto users, especially in light of US and EU sanctions, lawmakers argue that the ban is necessary to uphold the Russian ruble as the only legal monetary unit in the country.
Governments Don’t Like Crypto
Russia’s proposed ban reflects ongoing efforts to establish clearer guidelines for cryptocurrency transactions within the country, aligning with international standards set by organizations like the Financial Action Task Force (FATF).
This is not the first time the Central Bank of Russia has considered implementing a cryptocurrency ban. In January 2022, the bank proposed to Putin’s administration to ban cryptocurrencies. According to the bank, cryptocurrencies are a type of investment that is heavily speculative and could pose risks to the country’s financial stability.
The bank suggested the ban should apply to the issuance and circulation of cryptocurrencies, centralized exchanges and P2P trading platforms.
In December 2021, Russia’s central bank also called for a ban on crypto, arguing that the sector has no place in the domestic financial system.
Crypto Mining Impact?
Despite restrictive laws on cryptocurrencies, Russia has become a hub for Bitcoin mining. The country is also among those with the largest Bitcoin mining capacity in the world.
The country’s crypto mining industry is booming, with more mining machines flowing into Russia than anywhere else globally, driven by factors like cheap energy and cold weather conditions. Despite such progress, Russian authorities have yet to legalize cryptocurrency mining activities within their jurisdiction.
According to a report from RBC last September, the Russian Ministry of Finance had proposed a new classification for crypto mining companies – treating them as exporters. Previously, in 2022, a separate bill was submitted to the government, outlining the procedures for selling mined Bitcoin. The bill, however, requires operators to share information with the Federal Tax Service.
Russia’s stance towards cryptocurrency has become more open in recent years. The reason behind the change is international sanctions limiting access to global payment systems, which propel the country to seek alternatives for cross-border trades.
If the Russian government adopts similarly strict measures to China’s crypto and mining ban, it could lead to market turmoil. Given that Russia hosts a huge part of global mining, a mass exodus of miners would exacerbate market conditions, just like what happened with China when the government started prohibiting all crypto-related activities.
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