In the Russian Federation, it’s estimated that over 12% of the population owns cryptocurrency. That’s more than the United States (8%). But in the largest country on earth, authorities in the Kremlin are said to be eyeing up a potential ban on crypto investments. But what does this mean for the average Russian cryptocurrency holder?
In 2020, the Russian central bank gave legal status to cryptocurrencies. Although this did not mean they could be used as a form of payment. However, the state and its financial bodies have been skeptical of Bitcoin and the numerous other altcoins on the market.
As a result, it’s expected that they could be moving towards banning crypto investments. But although this would bar future transactions, it’s believed that current cryptocurrency investors in the country will not be forced to get rid of their investment, which is undoubtedly a relief for many.
“It is speculated that one of the main reasons for Putin’s interest in blockchain is that transactions are encrypted, and thus easier to discreetly send money without worrying about sanctions placed on the country by the international community.”– Investopedia
Instead, the Russian Central Bank stated new rules this week. They noted that it was prohibited for funds to invest in cryptocurrencies or “financial instruments, the value of which depends on the prices of digital currencies.”
Historically, the Russian government has primarily viewed cryptocurrencies negatively, albeit outdated way. Often, they associate them with money laundering or support for terrorist groups. Despite this, Russia is believed to have invested in cryptocurrency in 2019 as a potential workaround of sanctions imposed by the West stemming from the ongoing conflict in Ukraine, amongst other things.
But what about CryptoRuble?
At the same times talk of the ban on conventional cryptocurrencies, the country is working on its national cryptocurrency. Russian President Vladimir Putin announced this news in 2017. Known as CryptoRuble, it aims to be the national digital currency of Russia.
So Russia is seeking to ban cryptocurrencies while releasing its own. A paradox? Not quite. The bulk of cryptocurrencies we know and love are characteristically decentralized. Russia’s CryptoRuble is centralized, which cannot be mined.
Instead, CryptoRuble is issued by the Russian government. Which means it’s backed and regulated by an official body. It underwent testing in the second half of 2021 and is expected to be officially rolled out sometime in 2022.
If realized, this news is expected to be a blow for the significant crypto community in Russia. Due to its centralized nature, CryptoRuble is unlikely to be an attractive replacement for Bitcoin and Ethereum that Russian crypto traders are used to.
It’s said that the country sees around USD 5 billion in crypto transactions take place every year. Compared to the 8% of the U.S. population that owns crypto, almost 12% of the Russian population holds some form of cryptocurrency.
This latest possibility of a crypto ban in Russia comes shortly after the crackdown of cryptocurrency mining in neighboring China earlier in 2021. Whilst it may be bad news in the East at the moment, there is some positive news in the West.
For example, WhatsApp has recently piloted a cryptocurrency payments system that could have the potential to convince large swathes of the general public to make the shift from fiat currency to cryptocurrency by allowing everyday people to receive, spend, and send crypto assets with ease.