Russia’s Central Bank Looks To Ban Cryptocurrency Mining & Investment

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Bitcoin miners from China leave Siberia energy depleted

Russia’s Central Bank stated last Thursday it intended to seek legislation to ban cryptocurrency investment and mining as governments around the world crack down on the decentralized currencies, citing threats to monetary stability. The Central Bank said “speculative demand” is driving the rapid growth of decentralized cryptocurrencies and risks creating a bubble in the market. “Cryptocurrencies also have signs of a financial pyramid as increase in their prices is largely driven by demand demonstrated by new market participants,” it said.

Russia has the world’s third-largest share in the global crypto mining market behind the United States and Kazakhstan. China cracked down on bitcoin mining last year.

The move has come as it has emerged that Bitcoin miners from China have been entering Siberia to use the cheaper Russian national grid amongst bans in their own country, but the energy consumption has shot up so much there is now the risk of regional blackouts – a disaster in the Siberian winter.  

Russia’s Central Bank said it seeks to ban financial institutions from investing in or carrying out any operations with cryptocurrencies. It also seeks to ban cryptocurrency exchanges and any platforms that facilitate the circulation of cryptocurrencies.

The Bank estimates that Russian citizens’ transactions using decentralized cryptocurrencies amount to $5 billion per year.

It also proposed banning crypto mining, citing the threat to Russia’s financial stability through its “unproductive consumption” of electric power “and the implementation of Russia’s environmental agenda.”

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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