Russia to ban issuance, mining, circulation of cryptocurrencies

The Bank of Russia has proposed to ban the issuance, mining and circulation of cryptocurrencies in Russia in order to alleviate the dangers caused by the proliferation of cryptocurrencies, the regulator said in a report on Thursday.

"The status of the Russian ruble, which is not a reserve currency, makes it impossible to apply a soft approach in Russia and ignore the growth of risks. In our opinion, additional measures are appropriate," the document says.

In particular, "in order to reduce the threats caused by the proliferation of cryptocurrencies," the Bank of Russia proposes introducing a number of changes to the legislation.

"[It is proposed to] introduce a ban on the issue and (or) organization of the issue, organization of circulation of crypto-currencies (including by crypto-exchanges, crypto-exchangers, P2P platforms) on the territory of the Russian Federation and establish liability for violating this ban," the regulator says in the report.

It is also proposed to establish liability for violating the legal ban on the use of cryptocurrencies as a means of payment for goods, works and services sold and bought by legal entities and individuals, that are residents of the Russian Federation.

"[It is proposed to] introduce a prohibition on investments by financial institutions in cryptocurrencies and related financial instruments, as well as on the use of Russian financial intermediaries and Russia’s financial infrastructure to carry out transactions with cryptocurrencies and establish liability for violating this ban," the Bank of Russia specified.

The regulator believes the prohibition on cryptocurrency mining in Russia would be the best solution.

In December 2021, Chairwoman of the Bank of Russia Elvira Nabiullina said that the Central Bank opposed the use of Russia’s financial infrastructure for cryptocurrency transactions. In June 2021, she named crypto assets as the most dangerous investment strategy.

Also, in December 2021, the regulator’s Deputy Chairman Vladimir Chistyukhin said that the Bank of Russia intends to legislate the rules for the circulation of cryptocurrencies. However, he noted that the regulator does not see a place for cryptocurrency in the Russian financial market.