Russia is well-known for its stance on cryptocurrencies. Their opinion on digital assets is similar to that of China, who has been trying to ban cryptos for a long time. However, is it even possible?
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The ban on cryptocurrencies
While there are several countries that have banned cryptocurrency payments since 2018 or even sooner, like Bolivia, Indonesia, Colombia, and Algeria, there are countries that have a more significant impact. China has been eyeing cryptocurrencies for years now and warned its nation to beware of digital assets. They banned crypto mining, payments, and other forms of cryptocurrency operation.
Despite countries’ ambition to ban cryptocurrencies and an effort to make people stay away from these digital assets, there was a colossal bull market in 2020 and 2021 which resulted in a new all-time high on Bitcoin. So while Russia and China are the most populated countries banning crypto payments, it has been shown as not effective – actually the opposite.
Some governments that have prohibited cryptocurrencies claim they are being used to transfer money to criminal activities and contend that the growth of cryptocurrencies could disrupt their financial systems. While this may be true, fiat currencies have also been used to fund criminal activities. So what’s the deal here?
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Vladimir Putin bans crypto
A federal law prohibiting the use of digital financial assets as a form of payment was recently signed into law by Russian President Vladimir Putin, making cryptocurrency payments illegal in that country. Digital assets and digital rights are no longer recognized as “monetary surrogates” and cannot be used to pay for goods and services under the new law.
The Russian ruble is the sole officially recognized currency in the Russian Federation, and other monetary units are prohibited. Therefore, holding exchange operators and companies accountable for any violations will ensure needed compliance. Such operators are referred to as “subjects of the national payment system” following Russian law. As such, they are subject to rules that restrict the types of transactions they are permitted to conduct and prohibit them from offering leverage and yield products to their clients.
Russia’s position on cryptocurrency has been unclear as the Russian central bank made it clear in May that it was open to the concept of using cryptocurrencies for domestic transactions, but not necessarily for foreign settlements. On the contrary, the Russian Minister of Industry and Trade claimed that cryptocurrency payments would eventually become legal in some form. That is pretty confusing for crypto investors and users.
So where do we go from here?
Since Russia invaded Ukraine, it has been a hot topic in the cryptocurrency space. As a result, major crypto exchanges like Binance and Coinbase declared that they would abide by EU and US rules restricting Russians’ access to exchanges. When Putin claimed that Russia had several competitive advantages, including an excess of electricity and skilled workers on hand to mine crypto, he expressed support for mining Bitcoin back in January. Now it’s the opposite.
No matter what laws states try to make, there is probably no clear way to ban cryptocurrencies. That is mainly because of the mixed opinions by several counties and lawmakers, where one is against it, and the other supports it. Moreover, the crypto space is known for being decentralized and needs no authority to function. So while many investors may panic because of the crypto ban, it has little effect on the long-term price development of the crypto market.