Russia’s Central Bank Proposes BAN on use and Mining of Cryptocurrencies: What are the Consequences

The relationship between the Russian government and cryptocurrencies is… Complicated, to say the least.

According to Reuters, their central bank is proposing a complete ban on cryptocurrencies and mining services to guarantee its economic sovereignty and people’s wellbeing.

The Chinese government banned everything related to crypto in its country. That forced miners to look elsewhere to continue their activities. A lot of them transferred their businesses into Russian territory.

The reasons are clear: great empty spaces to install mining hardware and cold weather that helps maintain the machines cool (mining rigs produce too much heat).

But the Russian government believes that crypto can be used for money laundering, terrorism, and many other types of digital crimes. The population can have cryptocurrencies; however, they can’t be used as a payment method.

This is not something new: many other proposals of regulations (or even a complete ban on crypto) were always discussed among officers.

The consequences

Russia is the third-largest crypto mining site according to Statista. It’s only surpassed by the United States and Kazakhstan. If crypto and mining are completely banned in Russia, a lot of companies will be forced to move to other countries that are more permissive.

Officials said that miners are giving headaches because of the machine’s great energy consumption. That could be dangerous during the cold winter months; some Russians are using electric heaters to endure the harsh weather and blackouts could occur.

Elizaveta Danilova, an official of their central bank, said that they’re not looking forward to completely banning cryptocurrencies as the Chinese did — instead, they prefer to work on specific regulations.

For that matter, the financial entity will communicate with other countries that are demanding users’ data from exchanges and other crypto-related services.

The central bank announced that the government is working on a digital version of the ruble, their fiat currency. Maybe there’s a relationship between the crypto ban and the entry of a regulated and centralized asset? Only time will tell.

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