Russia Plans To Ban Crypto Mining
The Bank of Russia has just released a report outlining its position on cryptocurrencies. Put simply, Russia wants to push cryptos out of the country.
No Mining, No Transactions Inside the Country
The Bank of Russia believes that cryptocurrencies pose significant risks to the well-being of Russian citizens and the stability of the financial system. In addition, the Bank of Russia highlights its role in illegal activity.
Put simply, the Bank is concerned that the additional development of crypto markets will hurt the sovereignty of its monetary policy. Interestingly, the Bank says that developed countries which have reserve currencies can afford such risks, so they choose the path of regulation.
The Bank wants to add penalties for using cryptos as a means of payment inside Russia, ban crypto exchanges and P2P platforms, and ban crypto investments for financial firms.
Importantly, the Bank of Russia does not propose banning crypto for Russian citizens, so they will be able to use foreign exchanges to purchase cryptocurrencies.
Another important thing is that the Bank of Russia wants to ban crypto mining due to high energy usage and increased demand for crypto infrastructure, which may be used to bypass other crypto bans.
A similar idea (on proof-of-work mining) has been recently voiced in the EU, although it should be noted that the Bank of Russia’s proposal has a much bigger chance to become law.
What This Means for Crypto Markets?
According to the Bank of Russia, the country accounted for 11.2% of the global hashrate in August 2021. Its share in the global hashrate was rising rapidly, as it was just 6.9% at the beginning of 2021. In August 2021, Russia was behind the U.S. (35.4%) and Kazakhstan (18.1%).
It should be noted that crypto markets have been able to deal with the ban on crypto mining in China. However, crypto miners may soon find themselves in a “nowhere to run” situation as the number of countries with cheap electricity and sufficient technical development is limited. If Russia bans crypto mining and something happens in Kazakhstan, which has recently suffered from unrest, miners may find themselves stuck in the U.S.
It is not clear whether the news will have an immediate impact on Bitcoin and other leading cryptocurrencies like Ethereum, Cardano or Solana. The good news is that the Bank Of Russia did not propose to ban cryptos for Russian citizens, so there is no risk of forced sales, which could have put pressure on some coins.