Russia’s Central Bank Proposes Banning Crypto

Russia, cryptocurrency

Comparing the digital coins to a pyramid scheme, Russia’s central bank has called for an outright ban on cryptocurrency.

According to multiple media accounts Thursday (Jan. 20), the Bank of Russia — stationed in the third-largest crypto-mining nation on earth — said in a new report that the “potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia.”

This move is the latest in a worldwide crackdown on cryptocurrency as numerous governments express concerns that digital currencies would disrupt their financial systems.

In its report, the bank said the growth of cryptocurrency was determined primarily by speculative demand and could lead to a market bubble that threatened financial stability.

The bank said financial institutions should be blocked from carrying out operations using crypto and called for a ban on crypto exchanges. The bank noted that Russians are active crypto users, transacting around $5 billion per year.

There’s also the issue of energy consumption, as bitcoin and other cryptocurrencies are mined using powerful, electricity-guzzling, fossil-fuel-powered computers.

“The best solution is to introduce a ban on cryptocurrency mining in Russia,” the bank said.

Last week, Pakistan’s central bank also called for a crypto ban in that country, while U.S. officials have spoken out about the need for more regulation in the sector.

China’s central bank, meanwhile, imposed a blanket ban on cryptocurrency last year, citing illegal activities surrounding crypto — money laundering, gambling, pyramid schemes — that have disrupted the economy.

Read more: Regulator: EU Should Ban Crypto Mining Method That Uses Large Amount of Energy

The report arrives one day after the vice chairman of the European Securities and Markets Authority (ESMA) called on the EU’s 27 member states to ban crypto mining.

The ESMA’s Erik Thedéen says bitcoin mining has become a national issue for his native Sweden and warned that cryptocurrencies have worsened climate change. He specifically called for a ban on the mining practice known as Proof of Work (PoW) in favor of the less energy-intensive Proof of Stake (PoS) model.