Russian central bank to seek ban on investment in cryptocurrencies

MOSCOW: The Russian central bank would like to ban investments in cryptocurrencies in Russia, seeing risks to financial stability in the rising number of crypto transactions, two financial market sources close to the central bank said.

Russia for years spoke against cryptocurrencies, saying they could be used in money laundering or to finance terrorism. It eventually gave them legal status in 2020 but banned them from being used as a means of payment.

The central bank is now in talks with market players and experts about the possible ban, which, if approved by lawmakers, may apply to new purchases of crypto assets but not to those bought in the past, one of the financial market sources said, asking not to be named due to the sensitivity of the matter.

Another source close to the Bank of Russia said the central bank’s current position is a “complete rejection” of all cryptocurrencies.

In a reply to Reuters request, the central bank said it was preparing an advisory report to voice its stance on the issue. It did not comment on specifics.

The annual volume of transactions with cryptocurrencies that Russians carry out is about $5 billion, according to the central bank. Its increasing popularity causes concerns about risks to financial stability, Central Bank First Deputy Governor Ksenia Yudaeva said earlier in December.

“The situation in developed market countries more and more resemble the so-called shadow financial system,” Yudaeva wrote in an article, adding that the use of cryptocurrencies lowers the efficiency of monetary policies.

Yudaeva, pointing at China’s experience, said Russia needed a further adjustment of cryptocurrency regulation.

In September, China intensified a crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.

Meanwhile, the Bank of Russia is planning to issue its own digital rouble, joining the global trend to develop digital currencies to modernise financial systems, speed up payments and counter a potential threat from other cryptocurrencies.

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