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The volume of transactions with crypto-currencies in Russia is currently about 5 billion dollars a year.
On Friday, Fitch released a study on Russia’s proposed ban on cryptocurrencies. While the report agrees with the position of the Central Bank of Russia (CBR) that the ban will limit its financial system’s exposure to risk, it also warns that such a proposal could “restrain the spread of technologies that can improve productivity.”
In addition, the agency warns:
“Let’s assume that this slows down the spread of crypto-innovations, which, for example, will improve the speed and security of payments or the liquidity of assets through tokenization. In this case, over time, this could weaken this aspect of the Russian banking sector’s operating environment relative to peers.”
In addition, Fitch commented on the introduction of a central bank digital currency, or CBDC, in Russia, stating that “[цифровой рубль] should enhance the ability of the authorities to monitor and manage financial flows, which, otherwise, may be undermined by the growth of cryptocurrency transactions.”
The report also explains that the main motive for the CBR proposing tough cryptocurrency restrictions could be to reduce competition from its upcoming CBDC.
As in India, the Russian cryptocurrency regulatory environment has been chaotic lately, with politicians often oscillating between a total ban on digital currencies and a call for an established regulatory framework. At the same time, even former Russian President Dmitry Medvedev expressed his comments on the proposal to ban cryptocurrency:
“To be frank, when they try to ban something, it very often leads to a result opposite to what was intended. But the position of the Central Bank, of course, has its own reasons for the ban, which are also known to everyone.”
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