Russia’s central bank is making progress on its proposal to impose a blanket ban on cryptocurrencies.
The country, which accounts for a significant share of the global crypto mining hashrate, is citing adverse consequences for its financial system and the environment because of crypto.
Places like Norilsk in Russia have become hubs for crypto miners, with the cost of energy low and the sub-zero temperatures helping Bitcoin (BTC) operations to keep their systems cool.
However, this is about to change. The Central Bank of Russia is also citing other negatives of giving cryptocurrencies too much reign, arguing that crypto is often associated with pyramid schemes and that in general, it creates the basis for undermining the sovereign state.
In this regard, Russia is following countries such as China, which also imposed a full shut down on the crypto industry, mining included.
Despite the cheap cost of electricity in Russia and seemingly ample amounts of it, the bank argued that mining and crypto operations are also posing a risk to its energy grid.
The government also wants to hold accountable individuals who trade in crypto but do not follow any rules. By one estimate, Russia’s crypto trading is close to $5bn every year, and possibly exceeding this amount.
However, a swift ban on crypto may have another adverse effect on the global crypto mining industry. After China suspended mining, some 65%-75% of the global BTC mining temporarily disappeared.
Operations have recovered by locating significant resources to places like Kazakhstan and Russia, both of which now seem to be either turning against crypto or seeking to prohibit it.
The Federal Security Service, which recently took out REvil, said that Russia should proceed with a blanket ban due to an increase in hard-to-trace cryptocurrencies that make it easier for criminals to hide their wrongdoings.
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