Reuters has recently reported that Russian central bank wanted to ban all investments in cryptocurrencies in the country.
The Bank of Russia has many times argued that cryptocurrencies could be used for money laundering and financing of terrorism. Currently, the Bank of Russia is waging a serious war against payments to illegal online casinos, and it looks that it will also use this argument will be used against cryptocurrencies.
The Bank of Russia is not joking – its war on casino payments crashed the capitalization of the Nasdaq-traded payments company QIWI, and smaller Russian companies have also been hurt badly.
According to Reuters, the Bank of Russia would seek to ban new purchases of crypto without any impact on coins that were bought before the potential ban.
Bank of Russia believes that crypto transactions in Russia total $5 billion per year. CoinMarketCap estimates that the current global crypto market cap is $2.18 trillion.
Interestingly, Legalization Is Also Possible
The news had a negative impact on crypto market mood, and leading coins like Bitcoin and Ethereum have been recently moving lower. While crypto markets can thrive without investments from Russian citizens, the general trend towards stricter regulation in the world serves as a bearish catalyst for cryptocurrencies.
It should be noted that it’s too early to tell whether Russia is ready to ban cryptocurrencies as the central bank’s opinion is not the only one. According to the recent reports in Russian business press, the head of the Russian Duma’s financial markets committee Anatoly Aksakov said that all options were on the table. He added that there were two main scenarios – a full legalization and a total ban.
While the Bank of Russia is worried about illegal transactions, the Russian government looks interested in a potential source of additional tax revenue. The crackdown on mining in China pushed miners to countries where cheap energy is available. Kazakhstan and Russia were among these countries, so Russia would have to give up potential revenue from both the tax on personal gains from crypto trading and a potentially more lucrative tax from mining revenue.
The decision on crypto assets in Russia is expected to be made in 2022, while any practical moves would be implemented in 2023. Meanwhile, crypto markets will likely remain sensitive to any news about tougher regulation, as the current trend is not favorable for crypto assets.