Russian central bank proposes ban on cryptocurrencies, citing threat to financial stability

Russia’s central bank on Thursday proposed banning cryptocurrency in the country over concerns about financial instability.

The bank released a report saying that cryptocurrency should be blocked as a means of transaction for government-issued currency, and financial institutions should be prevented from using it, Reuters reported. It also proposed banning the mining of cryptocurrency in the world’s third largest region for such mining, citing the large amount of energy it takes to mine the currency via powerful computers.

“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the bank said in the report, according to Fortune. “This is due to the traditionally higher propensity for saving in foreign currency and an insufficient level of financial literacy.”

Cryptocurrency, or decentralized digital money tracked via a ledger called blockchain, has seen an international boom in recent years but it has worried some governments because it is privately held and volatile.

Last year, China banned the use of cryptocurrency for financial institutions and companies.

Russia gave cryptocurrencies legal status in 2020 but banned them from being used as payment, according to Reuters.

Russia’s Federal Security Service lobbied the bank’s head, Elvira Nabiullina, for a blanket ban on cryptocurrencies because Russian opponents typically use the digital currency, Fortune reported.