Putin supports Bitcoin mining and opposes proposed cryptocurrency bans

Putin supports Bitcoin mining and opposes proposed cryptocurrency bans

Russia’s Central Bank has been toying with the idea of cracking down on cryptocurrencies for a long time. The company recently recommended prohibiting the purchase, selling, and mining of digital assets like Bitcoin. The bank published a paper for public opinion in which it warned about alleged financial pyramids and future crypto market booms. According to Reuters, the notion purportedly aroused concerns about threats to financial stability, individuals’ well-being, and the bank’s monetary policy sovereignty. According to the study, “the potential economic consistency problems linked with crypto are substantially bigger in emerging markets, such as Russia.” This is due to a historically higher predilection for saving in foreign currency and a lack of financial literacy. According to the bank, suggestions and comments on the crackdown will be accepted until March 1 and will be taken into account in the final decision that will be enacted into law. The bank estimates that active Russian cryptocurrency investors transact $5 billion each year. “Russian citizens are taking part in the global bitcoin economy in a big way.” The risks to financial stability are currently minor; however, as citizens become increasingly active in the bitcoin market, the risks will rise dramatically. The Russian Ministry of Finance and prominent political figures have slammed the bank’s antagonistic attitude, stating that a ban would stifle the country’s high-tech development. They do acknowledge on the necessity for a transparent regulatory framework, and many of them believe that crypto miners should pay different energy pricing than the general public. However, Dmitry Kirillov, a national legal firm Lidings adviser, told the media that “at this point, the Central Bank report appears to be a proclamation of purpose,” and that “practice will indicate what specific regulatory changes it will result in.” “I sincerely hope that market participants will be able to persuade the regulator that cryptocurrencies can also represent governmental objectives,” he added. According to Cambridge University data, Russia is the world’s third-largest crypto-miner, accounting for 11.23 percent of all bitcoin mining hash rates. As a result, a crackdown would have a short-term negative impact on the company. As the debate heats up, the positions that stimulate bitcoin activity are relevant for the sinking crypto market. President Vladimir Putin claimed during a video conference that Russia has competitive advantages “especially in the sphere of [crypto] mining,” citing the country’s “well-trained employees” and abundant electricity. The Russian president took an outspoken stance on the industry, urging the Russian government and the Central Bank to “come to some form of collective conclusion and report on the successes that will be achieved.” “The Central Bank does have its own point of view, which is based on the fact that, according to Central Bank experts, the expansion of this type of activity poses considerable risks, namely to the country’s citizens.” While Putin agrees that cryptos offer some risks to consumers, he also encouraged government authorities to examine the country’s gains from the ecosystem. Russia’s senior officials appear to prefer rules to bans as their primary strategy.

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