By
Darya Rudz
July 24th, 2023
Admitting the volatility of cryptos and certain risks associated with it, Putin also highlighted the advantages that Russia can get if proper crypto regulation is introduced. In particular, crypto mining could bring good revenue to the country.
When it comes to the regulation of crypto-related activity, there are two camps. While some governments advocate for the development of the industry, others call for prudence and insist on banning cryptos. Recently, the Russian central bank proposed imposing a ban on mining and the use of cryptocurrencies in Russia, explaining such a decision with the high volatility of cryptos. However, Russian President Vladimir Putin does not believe there is a need to ban cryptos as they bring numerous advantages for Russia. Speaking in a video conference with government ministers on Wednesday, Putin called for negotiations in order to find a consensus on crypto regulation.
Putin on Crypto Regulation
Admitting the volatility of cryptos and certain risks associated with it, Putin also highlighted the advantages that Russia can get if proper crypto regulation is introduced. In particular, crypto mining could bring good revenue to the country. Notably, last year, Russia became the third-largest source of Bitcoin (BTC) hash rate, following the US and Kazakhstan.
Putin said:
“We also have here certain competitive advantages, especially in so-called crypto-mining. I mean surplus in electricity and well-trained teams present in the country.”
“The Bank of Russia deals with these issues and regulates them. The central bank is not standing in the way of regulatory progress and is itself making the necessary efforts to introduce new technologies into this sphere of activity,” added he.
Russian Finance Minister Ivan Chebeskov called for regulation rather than restriction as well. Yesterday, he explained that a ban on cryptos would lead to falling behind the worldwide tech industry.
The Bank of Russia’s Ban on Crypto
The ban on cryptos proposed by the central bank of Russia included the prohibition of crypto payments and preventing any operations with cryptocurrencies, ban on crypto mining, as well as stopping the activity of crypto exchanges. As the key financial institution explained, the crypto industry undermines the sovereignty of monetary policy in Russia. Besides, the bank believes that mining poses a threat to the country’s green agenda, jeopardizes Russia’s energy supply as well as amplifies the negative effects of the spread of cryptocurrencies, thus creating incentives for circumventing attempts at regulation.
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the Bank of Russia wrote.
Russia became home to mining after China labeled crypto-related transactions as illicit financial activity. The largest facilities are located in the country’s north and in Siberia. There, the temperatures are low and there is access to cheap power.
