Cryptocurrencies Carry Systemic Risks, Threaten Ruble, Bank of Russia Insists
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Loading... - Sharon Lambert
- 21 Apr 2022
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Central Bank of Russia Issues Warnings About Cryptocurrencies
Russians’ growing interest in cryptocurrencies, their significant crypto investments, and the high risks associated with crypto operations create potential systemic threats, the Central Bank of Russia (CBR) has pointed out in its annual report for 2021. Expanding on a long list of previously highlighted negatives related to digital currencies like bitcoin, the monetary authority stated:
"There is a risk of undermining the circulation of money and loss of sovereignty for the national currency."
The regulator is repeating earlier warnings that digital assets increase the risk of outflow of funds from the traditional financial system towards the still largely unregulated crypto market. This transfer of savings threatens the financial stability of Russian banks, the CBR says, quoted by RBC Crypto.
Bank of Russia remains concerned about the “well-being of citizens” as in its view, the growth of the crypto market forms a bubble while cryptocurrencies bear characteristics of financial pyramids. Investor protection is limited and investments in digital coins can be lost due to price volatility or as a result of fraud and cyberthreats, the CBR adds.
The report comes after in January the central bank suggested a ban on most crypto activities. Its hardline proposal was met with opposition from other government institutions. In February, the CBR presented legislation prohibiting cryptocurrencies. However, it is unlikely to win support as a growing number of officials in Moscow now see opportunities to employ crypto assets to circumvent western sanctions imposed over Russia’s invasion of Ukraine. Read More…
