CryptocurrencyRussian central bank looks to ban cryptocurrency investment in the nation.

Russia is the globe’s most sizable country in terms of land. On a map, Russia sits above Kazakhstan, Mongolia, and China. Russia dwarfs China in geographic coverage, but not in terms of the population although Russia still lies among the globe’s most populous countries. The country is also known as the Russian Federation. The ruble serves as Russia’s national currency. When it comes to Russia, cryptocurrency is still developing as a scene as the country evaluates its regulatory stance on various aspects of the asset class. In Russia, Bitcoin and other crypto-assets are not an acceptable form of payment under the country’s regulatory climate, however. Owning cryptocurrency is also prohibited for folks working in certain government positions.

During the ICO era of 2016-18, Russia emerged as one of the powerhouses in the crypto industry. The under-regulated status of initial coin offerings encouraged new investors and spurred Russian startups to explore new ways of integrating crypto and blockchain technology into everyday practices. 

While many of the eye-catching initiatives are now in a state of limbo or have since been exposed as scams, some have gone on to make a name for themselves. Vitalik Buterin, the co-founder of Ethereum, is one of the notable figures that attest to the expertise of Russians within the crypto and blockchain scene (although he is Canadian-Russian. It is worth noting that it was the success and expanded functionalities of the Ethereum platform that in part propelled the crypto craze and ICO explosion of the time. 

Despite Russia proposing its first cryptocurrency law back in January 2021, the country’s crypto market is still looking rather hazy and is associated with a lot of uncertainty due to a lack of regulation. As of January 1 2021 cryptocurrencies were declared ‘allowed’ in Russia – but not to be used as an exchange for goods and services. That means Russians can mine, trade, and hold cryptocurrencies – but using them as a payment option is considered illegal.

Policymakers in Russia are working on a new law to “protect” non-professional investors from rash investments in cryptocurrencies, according to reports. Russia needs new laws to adopt to protect retail investors from crypto-risks, believes Anatoly Aksakov, the chairman of the Russian State Duma Committee on Financial Markets. The crypto-future in Russia looks presently blurry. While its government has spoken about creating Russia's regulated digital currency, holding undeclared cryptocurrency between US$1,300 and US$13,000 is a finable and jail-time offense in the nation.

The Russian central bank wants to ban investments in cryptocurrencies in Russia, seeing risks to financial stability in the rising number of crypto transactions, two financial market sources close to the bank said. Authorities in Russia have long held that cryptocurrencies can be used for money laundering and to finance terrorism. Central bank governor Elvira Nabiullina has said her bank cannot welcome investments in cryptocurrencies, which Russians have used in annual transactions worth about US$5 billion. The Bank of Russia aims to join the global trend to develop its digital currency to help modernize financial systems, speed up payments and counter any threat from other cryptocurrencies.

The country’s central bank did give digital currencies legal status in 2020. But it prohibited using them as a means of payment. However, according to the head of the parliamentary Financial Market Committee, Anatoly Aksakov, lawmakers are also considering the legalization of crypto trading which would allow the taxation of related profits and incomes.