Russia’s central bank wants to ban cryptocurrency investments in the country as it sees risks to financial stability from the growing number of cryptocurrency transactions.

Russia argued for years against cryptocurrencies, saying they could be used in money laundering or to finance terrorism. It finally granted them legal status in 2020, but banned their use as a means of payment.

The Central Bank of the Russian Federation is now in talks with market players and experts about a possible ban. If lawmakers approve it, the ban would not apply to past transactions, but only to new crypto asset purchases. However, it has also been said that there is a “total rejection” of all cryptocurrencies from the financial entity.

The Central Bank is preparing an advisory report to express its position on the issue, but there has been no comments on the details so far. 

The annual volume of cryptocurrency transactions conducted by Russians is about $5 billion and one estimate shows that nearly 12% of the population already owns crypto (compared to a little over 8% of the U.S. population). The central bank’s first deputy governor, Ksenia Yudaeva, said this month that the growing popularity of cryptocurrencies raised concerns about risks to financial stability, noting that their use reduced the efficiency of monetary policies.

Pointing to China’s experience, Ksenia Yudaeva said Russia needed a further adjustment of cryptocurrency regulation. In September, China intensified its crackdown on cryptocurrencies with a blanket ban on all crypto transactions and mining, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks.

Meanwhile, the Bank of Russia plans to issue its own digital ruble, joining the global trend of developing digital currencies to modernize financial systems, speed up payments and counter a potential threat from other cryptocurrencies.

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