Central Bank of Russia Lays Case Against Cryptocurrency, Claims Threat to Economy

In its newly published annual report 2021, the Central Bank of Russia (CBR) highlighted that the growing appetite for cryptocurrency by Russians, considering the risks associated with crypto activities, poses a systemic threat to the Russian economy.

Adding to its long list of possible downsides the country could face from digital currencies like Bitcoin and Ethereum, the Bank of Russia noted:

“There is a risk of undermining the circulation of money and loss of sovereignty for the national currency.”

The financial institution repeated previous warnings about how digital assets exacerbate the risk of funds outflow from traditional financial systems into a relatively unregulated industry. The CBR argued that this transition of savings poses a massive threat to the financial stability of Russian banks.

Furthermore, the apex bank maintained its worry over investor protection in Russia, arguing that the crypto industry growth is simply a bubble and that cryptocurrency shows underlinings of financial pyramid schemes. The bank added that investor protection is limited and that crypto investments are at risk of permanent loss due to volatility, fraud, and cyberthreats.

Ministry of Finance in Russia for the Legalization of Cryptocurrency

On the other end, the Ministry of Finance has maintained efforts to bring about the legalization of cryptocurrency in the country, with the exemption of Bitcoin payments.

The ministry recently resubmitted a revised bill “On Digital Currency” to Moscow, which explained its approach to legalizing and regulating the crypto industry in Russia. That said, the CBR recently indicated that it could be receptive to the idea of legalizing the crypto industry.

Moving on, the Bank of Russia also cited local estimates that claimed that the volume of crypto transactions by Russia tapped $5 billion in 2021. Russia ranks as one of the top countries involved in the crypto industry and digital coin-minting.