Will Putin Save Cryptocurrencies After the Ban?

yousef28 January 2022Last Update : 2 years ago
Will Putin Save Cryptocurrencies After the Ban?

Last month, the Russian Central Bank officially banned mutual funds from investing in bitcoin, and was on the verge of banning cryptocurrencies permanently in the country.

But it seems that a breakthrough may come at the hands of President, Vladimir Putin, who has supported cryptocurrencies in Russia, which is the third largest country in the world in bitcoin mining after the United States and Kazakhstan.

Russia accounts for 11.2 percent of the global bitcoin mining hash rate, making it the world’s third largest bitcoin mining country, after only the United States and Kazakhstan.

The Russian president seems to have more optimistic plans regarding digital currencies and mining, which is facing ban campaigns in many countries of the world, led by China, and finally Kazakhstan has emerged. Russian President Vladimir Putin held a video meeting with members of his government, during which he declared that the country boasts some “competitive advantages” in bitcoin mining.

The message came a day after the Russian Finance Ministry declared that a ban on cryptocurrencies was not necessary, arguing that “it is necessary to allow these technologies to develop.”

After a lot of news spread about the Russian Central Bank’s tendency to ban digital currencies, it seems that President Putin is planning something else, in what appears to be a preparation for economic sanctions that Western countries may resort to because of the Ukraine crisis. On the Russian Central’s tendency to ban digital currencies, President Putin told government officials:

“The Central Bank did not prevent the country’s technological progress, the Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this field of activity.”

“We also have certain competitive advantages here, especially in the so-called mining – I mean surplus electricity and well-trained personnel available in the country,” Putin said.

Russia’s Federal Secret Service has sought to persuade Elvira Nabiullina, the governor of the Russian Central Bank, to impose a blanket ban on cryptocurrencies in the domestic market to prevent them from being used to fund Russia’s political opposition.

The Federal Secret Service is pressing for a blanket ban on cryptocurrencies, with suspicions surrounding the transfer of funds via cryptocurrency. This comes due to the difficulty of tracing its dealings and the increasing use of it by the Russians to donate to undesirable institutions and organizations, including media classified as foreign agents.

The Russian ban will not apply to assets held by Russians abroad, so Russians with bank accounts outside Russia will be able to trade cryptocurrencies.

Pavel Durov, CEO and co-founder of Telegram, said the proposed Russian ban on cryptocurrency could destroy many tech industries and alienate IT professionals.

Durov wrote, on his channel on “Telegram”: “The proposal by the Bank of Russia to impose a comprehensive ban on digital currencies would spoil everything. No developed country bans digital currencies.” Durov considered that the Russian ban will inevitably slow down the development of blockchain technology.

Elizaveta Danilova, head of the central bank’s financial stability department, said the proposed rules would not apply to assets held abroad, and people with offshore accounts would still be able to trade cryptocurrencies.

The bank, as the regulator, has targeted digital mining operations, which Danilova said harms the country’s green agenda and puts Russia’s energy supply at risk.

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