Russian government to ban cryptocurrency

Moscow: Citing security issues and volatility of internet-based 'cryptocurrencies', Russia has announced that it will be banning the tender of cryptocurrency as well as mining it in any form. The government has defended its decision by alluding to threats posed by the lack of transparency in cryptocurrency dealings.

In a report published on Thursday, the central bank said speculative demand primarily determined cryptocurrencies' rapid growth and that they carried characteristics of a financial pyramid, warning of potential bubbles in the market, threatening financial stability and citizens.

For years, Russia has been an opponent of fully accepting cryptocurrencies as it says they had vast potential to be misused for things like terrorist activities. In 2020, the government legalised crypto but banned it from being used in payments.

The move is the latest in a global cryptocurrency crackdown as governments from Asia to the United States worry that privately operated and highly volatile digital currencies could undermine their control of financial and monetary systems.

Elizaveta Danilova, head of the central bank's financial stability department, was quoted by Reuters as saying that there was no move to criminalise ownership of crypto currency as of yet.

However transactions of cryptocurrencies will be banned, with crypto-exchange Organisation Binance hoping the Russian government will open dialogue over the rights of Russia crypto-holders.

Figures have put Russia's cryptocurrency transactions at $5 billion annually.

Russia is the world's third-largest player in bitcoin mining, behind the United States and Kazakhstan, and in August, Russia accounted for 11.2% of the global "hashrate" - crypto jargon for the amount of computing power being used by computers connected to the bitcoin network.

Danilova said the measures taken by Russia would not be as severe as China's crackdown on internet currencies in September although they would be taking inspiration from them to curb further transactions.