With the growing capitalization of the crypto economy, Russians conduct crypto transactions worth billions of dollars a year, according to data collected by the Central Bank of Russia. Russian residents are among the most active participants in the crypto market, the regulator acknowledged.
Russians among most active crypto users, central bank admits
True to its strong stance on decentralized digital currency, the Central Bank of Russia (CBR) recently said that cryptocurrency operations “carry significant risks to financial stability and investors as well as climate risks.” The warning was issued with its overview of financial stability for the second and third quarters of 2021.
The monetary authority has recognized the rapid growth in capitalization of the digital currency market this year. According to his analysis, as cited by Forklog, increased investor interest in technologies such as blockchain, smart contracts, decentralized finance and stablecoins has played a key role in the rise in crypto prices.
Citing various analytical studies, the financial regulator admitted that residents of the Russian Federation are among the most active participants in the crypto space. Russians are also among the most frequent users of cryptocurrency platforms. Russia is one of the leaders in terms of the number of visits to Binance, the world’s leading crypto exchange.
Referring to estimates from major financial institutions surveyed last July, the Bank of Russia notes that the annual volume of digital currency transactions carried out by Russians is around $ 5 billion. However, CBR also notes that the anonymous nature of cryptocurrencies contributes to their use in criminal activities such as money laundering and terrorist financing.
The central bank, which consistently rejects the legalization of cryptocurrency as legal tender in the Russian Federation, has also flagged other related risks, including the conversion of fiat savings into crypto assets. The CBR considers cryptocurrencies unreliable as a store of value due to the volatility of their prices.
The regulator is also concerned about the energy-intensive nature of bitcoin mining. Rich in energy resources, Russia is an attractive destination for miners and some of its provinces where electricity prices are quite low require industry regulation. A growing number of officials in Moscow now believe mining should be legalized as an entrepreneurial activity and taxed as such.
The Bank of Russia points out that in general, the relationship between the digital currency space and the traditional financial sector remains limited. But at the same time, the authority believes that the spread of cryptocurrencies creates more and more risks for the Russian financial market and insists on the need for better supervision.
Do you think the Bank of Russia can change its attitude towards cryptocurrencies in the future? Let us know in the comments section below.
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