Russia’s former president and prime minister, Dmitry Medvedev, has expressed his disappointment with the Central Bank of Russia’s decision to prohibit crypto transactions.
The Central Bank of Russia’s proposal to exempt a number of crypto-related transactions from the legislation have sparked outrage in Moscow. Among the critics are the Finance Ministry, which presented its regulatory plan, the State Duma, where MPs are working on a new crypto law, and the government, which coordinated with other ministries to develop a roadmap for crypto regulation.
In a report released on January 21, the Central Bank advocated prohibiting the issuance, mining, and circulation of cryptocurrencies in the country in order to alleviate the concerns raised by their proliferation.
Dmitry Medvedev, now deputy chairman of the Russian Federation’s Security Council, acknowledged that the central bank’s position had grounds in an interview with Russian media Tass. The central bank cites concerns about the country’s financial stability and hazards to its residents as explanations for its tough stance on bitcoin.
According to Medvedev, the Bank of Russia’s recommendations for crypto regulation, which attempt to criminalize crypto-related conduct, may have the opposite effect of what is desired.
According to Bloomberg, Putin prefers to “tax and regulate” cryptocurrency mining rather than outright prohibit it. “We also have certain competitive advantages here,” Putin is said to have said, “particularly in the so-called mining industry.” “I’m referring to the country’s excess of electricity and well-trained employees.”
Putin’s stance appears to be more nuanced than that of Russia’s central bank, which has advocated for the prohibition of all cryptocurrencies, despite the Ministry of Finance’s justification for regulation. According to Bloomberg, Putin has asked the central bank and the ministry to seek a solution.
Other Russian officials have recently expressed more specific concerns. According to the business newspaper Vedomosti, Minister of Digital Development Maxut Shadayev, any restrictions on the issue and circulation of cryptocurrencies will stymie the development of the blockchain industry and contradict the country’s goal of strengthening the IT sector. He also said that a ban would lead to a lack of trained specialists.
The Russian Association for Electronic Communications (RAEC), which backs the finance ministry and the federal government, has also joined the fight against the Bank of Russia’s prohibition attempt. A prohibition would not solve current problems with fraud and other illegal activities; rather, it would exacerbate control by shifting market activity to the “grey” sector. In a statement released by the business news portal RBC, RAEC further stated:
According to RAEC specialists, digital marketplaces will contribute 6.7 trillion roubles (about $85 million) to the Russian economy in 2020. According to the organization’s preliminary projections for 2021, the indicator will have increased by 29 percent to 8.6 trillion roubles (about $110 million at current currency rates).
Russia isn’t the only government considering outlawing cryptocurrency or adopting stricter regulations.
Earlier this year, India had a law requesting a reconsideration of a crypto ban, while China announced a big crackdown on the crypto business in 2021. As a result of the Chinese crackdown, which restricted crypto mining and trade, miners and significant crypto companies were forced to relocate to other nations.
Although the US has not indicated that it will take such action, industry insiders expect it will in light of recent discoveries about the sector.