Russia’s central bank has reportedly announced that it plans to prohibit cryptocurrency investment as part of a broader effort to regulate the space. The move comes after a number of high-profile scams, including an alleged $400 million exit scam by two organizers behind one of Russia’s largest ICOs.
The “the next bitcoin stock” is a new report that Russia’s central bank wants to prohibit crypto investments. The central bank believes that cryptocurrencies are not as safe as they seem.
According to two unnamed financial industry insiders who spoke to Reuters today, Russia’s central bank (Centrobank) is attempting to prohibit Russian citizens from purchasing Bitcoin and other cryptocurrencies.
Centrobank is worried about “the expanding volume of crypto transactions” posing a danger to the country’s financial stability, according to the article. Cryptocurrencies are now legal in Russia; citizens may legally hold and trade them, but they cannot be used to make payments.
Centrobank is presently “in negotiations with market participants and specialists about a potential ban,” according to one of Reuters’ sources. If passed, it would make it illegal to buy crypto in Russia for the first time, but it will not affect digital assets already purchased.
Centrobank’s current policy, according to another source, is a “total rejection” of all cryptocurrencies.
Making a mistake and shooting oneself in the foot
A hypothetical blanket ban, on the other hand, would not only impede law enforcement agencies’ crypto-related investigations, but would also be “totally meaningless,” according to Sergey Mendeleev, CEO of InDeFi SmartBank, a crypto-focused financial services business.
“Cryptocurrencies were created precisely to function even in the event of a full prohibition.” China, for example, has outlawed them, but so what? Is there a decrease in the use of crypto in China? Obviously not. It’s only that everyone will be more cautious, and will go underground,” Mendeleev said.
While Russian law enforcement authorities already have some avenues to investigate crypto-related offenses via exchanges, he noted that if Centrobank enacts such a prohibition, they would eventually have nowhere to turn with their demands.
“It is absurd to prohibit the possession of cryptocurrencies in general. People still don’t comprehend that I may have a rhyme in my brain, and this arrangement of words could be worth tens of millions of dollars—and no one will ever know,” Mendeleev remarked, implying the nature of crypto private keys.
Aside from being “totally meaningless,” he believes that a crypto prohibition would make no difference.
“However, they will have to disregard taxes.” What’s the objective of banning casinos? Everything moved online and underground, and tens of thousands of people were left jobless in the heart of the crisis, while the state lost revenue,” Mendeleev concluded.
The number of crypto transactions is increasing.
According to a research published by RosBusinessConsulting in late November, Centrobank believes that Russians are presently transacting $5 billion in cryptocurrency each year.
Russian customers are also among the most active crypto traders in the world, according to the bank. Russia, for example, is said to be one of the top nations in terms of how often its citizens visit cryptocurrency exchanges.
Centrobank also revealed intentions in September to broaden the list of crypto-restricted applications (such as payments) and to impose increased administrative and criminal penalties for noncompliance.
Confiscation is also a possibility.
It was also disclosed last week that the Russian Attorney General’s Office is working on a slew of new criminal law revisions that would enable law enforcement authorities to legitimately seize illegally obtained Bitcoin and other cryptocurrencies.
According to Nikita Soshnikov, director of regulated crypto exchange Alfacash and former head of Deloitte CIS, similar conversations have been happening in Russia since at least 2019.
“At the moment, there are no legal frameworks in place in Russia for confiscation—and, more significantly, the subsequent selling of seized property in the form of cryptocurrency.” But it didn’t stop law enforcement officials from taking such items, according to Soshnikov.
Last week’s words by the country’s attorney general make perfect sense in this context. If it becomes unlawful to acquire cryptocurrency in Russia, law enforcement agents would undoubtedly require a legal framework to seize it—but how?
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