The Bank of Russia has published a damning consultation on digital assets which proposed outlawing crypto trading and mining.
The central bank’s report labelled crypto currencies a financial stability risk and warned that mining is a drain on the country’s energy sources.
The dynamics of the crypto market were compared to a pyramid scheme by the Bank of Russia which expressed concerns that digital assets attract investment from individuals who have a low level of financial literacy.
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the report said. “This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy.”
The Central Bank proposed a ban for the use of crypto currencies as a means of payment for goods, works and services sold and bought by Russian residents, whether legal entities or individuals. Institutions would also be barred from investing in crypto under the proposed changes.
The report added that a ban on crypto currency in Russia could be “the best solution” to concerns that the practice is a drain on the country’s power supply.
The price of Bitcoin has tumbled by 6.4 per cent in the past 24 hours and is currently trading below $40,000. The top ten crypto currencies, excluding stablecoins, are all trading in the red today with Ethereum down by 7.5 per cent at $2,900.
When China vowed to ban crypto mining and trading in May 2021 it sparked a major market correction which saw Bitcoin shed 50 per cent of its value compared to its April peak.