Cryptocurrencies should be banned: That’s the verdict from Bank of Russia, the country’s central bank.
It casts a chill over the crypto space, which has been pushing for mainstream digital assets adoption.
In a report, the institution indicates that cryptocurrencies are volatile and widely used in illegal activities such as fraud.
By offering an outlet for people to take their money out of the national economy, they risk undermining it and making the regulator’s job of maintaining optimal monetary policies harder, the report said.
The bank, therefore, said Russia needs new laws and regulations to effectively ban crypto-related activities. The bank is not suggesting banning ownership of crypto by private citizens, says Elizaveta Danilova, the director of the Bank of Russia’s Financial Stability Department.
Bitcoin, the king of crypto, recently was down 10.5% at $38,502.95.
Ethereum, the second largest crypto by market cap, fell 13% to $2,803.12, while binance coin was down nearly 12%.
New darlings in the crypto sphere were suffering despite their ecosystems being deemed promising due to their potential uses: Cardano was down 15%, solana was losing 16% of its value, while polkadot fell 14% and avalanche dropped 17%.
Meme coin dogecoin dropped 10%.
Countries With a Full Ban on Cryptocurrencies …
Nine countries – Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia – have currently a full ban on crypto, according to a November 2021 Law Library of Congress report.
“It is worth noting that since the publication of the 2018 report, the number of countries found to have issued cryptocurrency bans has increased significantly,” said the report.
It added: “While the 2018 report identified 8 jurisdictions with an absolute ban and 15 jurisdictions with an implicit ban, the November 2021 update identifies 9 jurisdictions with an absolute ban and 42 with an implicit ban.”
Bangladesh has warned that cryptocurrency transactions “may violate the Money Laundering Prevention Act, 2012,” according to the report.
In Egypt, authorities made clear: “Individuals, banks, and other financial institutions are prohibited from dealing in cryptocurrencies,” according to a February 2019 report of global law firm Baker McKenzie.
… But Are They Enforcing It ?
Not really, even if Algeria threatens with criminal sanctions any person or institution that would violate the ban.
According to the Cambridge Centre for Alternative Finance, the nine countries where crypto are banned control 0.19% of the bitcoin mining hash rate as of July 2021.
This means they contribute roughly one-fifth of a percent of the network’s total computing power.
Crypto Implicitly Banned in 42 Other Countries
This means that their governments do not allow financial institutions to take on crypto companies or holders as clients or that they even prohibit cryptocurrency exchanges from operating, among other restrictions.
It’s also the case for Cameroon and Chad, which are members of the Economic and Monetary Community of Central Africa; Cemac says that since cryptoassets are unregulated within the Cemac, the offer of services related to cryptoassets is illegal.
Chad and Burkina Faso nevertheless account ed for the fifth and sixth highest peer-to-peer trading volumes for bitcoin in Africa as of September 2021, according to Useful Tulips.
Countries neighboring Russia also implicitly ban crypto. This list includes Georgia, Moldova, Tajikistan and Turkmenistan.
Even Kazakhstan, champion of bitcoin in fact, has a 2020 law that allows only cryptocurrencies backed by other assets – stablecoins.
But the country considers bitcoin a commodity and has thus become one of the host countries for bitcoin miners that are forced to leave China.
The share that the country occupies in the world mining has exploded.
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