Russia’s central bank is reportedly considering banning both the use and mining of all cryptocurrencies in the country.
According to a Reuters article, the country’s main financial institution is increasingly concerned about the expansion of the creation and use of digital currency within its borders, although it has granted a legal status of bitcoin and other similar currencies in 2020.
The central bank warns that current trends in cryptocurrency growth resemble a “financial pyramid,” or the type of fiscal structure that could lead to extreme volatility and the formation and collapse of currency bubbles.
Russia accounted for 11.2% of the global hashrate last August
The bank is concerned not only about the negative impact such unpredictability could have on Russian citizens, but also about the impact the growth of cryptocurrencies could have on the country’s monetary sovereignty, Reuters reports.
One of the primary purposes for the creation of bitcoin and its derivatives was to wrest control of currencies from national government organizations. It seems that the progress made by cryptocurrencies within Russian borders has reached such a point that the country’s financial policymakers are increasingly concerned about their ability to continue controlling the currency.
On top of all these issues, Russia also seems to share concerns about the environmental impact of cryptocurrency mining that so many other countries are currently grappling with. Reuters notes that Russia accounted for 11.2% of the global hashrate last August, placing it third in terms of cryptocurrency mining volume behind the United States and Kazakhstan.
Sticking to China?
The massive amount of electricity needed to power the mining devices driving this throughput is likely a cause for concern for a country that has already experienced historic difficulties with electric power, fuel consumption fossils and resource management.
According to the article, the next step for Russia could be to align itself with countries like China, which recently banned all domestic mining and crypto transactions. The bank also apparently plans to ally with regulators in other countries to track Russians’ use of international cryptocurrency exchanges as a way to circumvent any bans.
Although the Russian central bank does not want external individuals or organizations to control digital currencies inside the country, it apparently plans to launch its own digital ruble in a bid to modernize its financial system, speed up payments and to usurp any chance for independent digital currencies to take hold.
Source: ZDNet.com