Russian authorities are preparing to ban crypto assets like Bitcoin in the country as they seek to shore up the ruble following the rising geopolitical crisis in the region.
According to CryptoDaily, Russia will allow only digital financial assets issued within its jurisdiction.
Anatoly Askakov, Chairman of the State Duma Committee on the Financial Market, is leading the effort. The Duma committee is part of the Russian government’s effort to control the crypto ecosystem following the backdrop of an escalation of geopolitical tensions in the region.
According to Askakov, the legislation aims to restrict non-Russian crypto operations in the country in a bid to assert the dominance of the ruble.
Digital financial assets issued in Russian jurisdiction and digital rubles will be allowed. The need for a ban is due to the fact that today, cryptocurrency is a quasi-currency that replaces the ruble in the country. But only the Russian ruble fulfills the mission of the monetary unit, so this decision has been made,” Askakov said.
However, the ban has exempted crypto miners and other special crypto projects with ties to the central bank.
This is because crypto mining has given Russia a significant boost via increased taxes. Data from Statista has shown that crypto miners produce over $2.59 billion in liquidity for foreign trade settlements in Russia.
The proposed ban is not without objections, with Artem Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy, and other policymakers debating the approach. They stressed the importance of precise regulations.
“The regulation of cryptocurrency should be prescribed in the digital code, which would clearly spell out the conceptual apparatus and common judicial law enforcement practice,” Artem said.
The effect of the proposed ban on the prices of cryptocurrencies is expected to be minimal in comparison to that of China because Russia has minimal crypto infrastructure.
For example, when the Chinese government banned crypto mining and activities, it led to a market-wide drop in prices as China was home to many Bitcoin miners and possessed significant crypto infrastructure.
The proposed Russian ban is not expected to have a significant effect on crypto markets because Russia’s crypto infrastructure is minimal.
What to Know
- Despite the proposed ban, Russia’s Finance Minister, Anton Siluanov, wants a moderate approach, calling for regulations to facilitate the use of cryptocurrencies for domestic and international transactions.
- The head of the Bank of Russia, Elvira Nabiullina, has also come out in support of the experimental use of cryptocurrencies for international settlements.
- Russian entities are making use of cryptocurrency, especially USDT, to procure military technology in the ongoing geopolitical tensions in the region.
