Regulatory tightening? Deputy Governor of the Central Bank of Russia hints at banning private cryptocurrencies

On December 20, foreign media sources pointed out that Vladimir Chistyukhin, deputy governor of the Central Bank of Russia, hinted on Monday that privately-operated cryptocurrencies may soon no longer be used in the country’s financial markets. Vladimir Chistyukhin stated that the Central Bank of Russia is preparing a report detailing recommendations on restricting the use of such cryptocurrencies in Russia. Chistyukhin further pointed out that we believe that there is no room for cryptocurrency in the Russian financial market.

In fact, sources have pointed out on the 16th that the Central Bank of Russia seeks to ban the investment in cryptocurrency in Russia. On the 17th, Valeriy Lyakh, the head of Russia’s anti-market misconduct department, stated that investing in cryptocurrencies is a “out-and-out scam” and a “financial pyramid”. Lyakh stated that the cryptocurrency market is very volatile, there is no regulation, and no one is investigating the manipulation in it.

The data shows that the annual cryptocurrency transaction volume of Russians is about 5 billion U.S. dollars. Previously, the Central Bank of Russia also pointed out that the spread of cryptocurrency has brought more and more risks to the local traditional financial market, so it is necessary to strengthen the monitoring of the local people's crypto transactions.

Russia has been planning to issue its own digital ruble against private cryptocurrencies, saying they may be used to launder money or finance terrorism. On December 17, Russia’s central bank governor Nabi Urina also pointed out that he is skeptical of cryptocurrencies. Cryptocurrencies are often used for illegal operations. Investment in such assets is not welcome. We are worried about the impact of retail investors on the stock market. Right, Russian infrastructure should not be used to use cryptocurrency.

Russian President Vladimir Putin also stated on November 30: We are being forced to exit the US dollar zone. Russia must reduce the volatility of the ruble. We are prepared to continue to raise interest rates, but the rate will not be so large. Cryptocurrencies have high risks.

It is worth mentioning that the news on the 19th pointed out that Russian officials are discussing "two diametrically opposed methods" to regulate cryptocurrencies. Some regulatory proposals are very strict and envisage a total ban on the acquisition and possession of cryptocurrencies. Another approach is to authorize the establishment of cryptocurrency exchanges and ensure that their operations are transparent to regulators, which will also make it easier for the Federal Revenue Service to tax their transactions.

However, people close to the Central Bank of Russia (CBR) revealed that the central bank’s current position is to "completely reject" all cryptocurrencies. Earlier, the country’s financial companies proposed to allow cryptocurrency investment in the Russian Federation. In this regard, the Central Bank of Russia stated: Our bank believes that the services related to the operation of encrypted assets and such asset derivatives provided by financial institutions are not in the interests of financial market investors and are very risky. Therefore, the proposal of members of the financial sector to authorize the provision of encryption-related services was rejected.

In addition, the Central Bank of Russia has previously stated that the country needs to further adjust the regulation of cryptocurrencies, and pointed out the experience of China and India. At the same time, the Bank of Russia aims to join the global trend and develop its own digital currency to help modernize the financial system, speed up payments, and respond to threats from other cryptocurrencies.