Former Russian President Rejects Push By Central Bank To Ban Crypto

Dmitry Medvedev, Russia’s former president and prime minister, has expressed his displeasure with the Central Bank of Russia’s decision to ban crypto transactions.

Medvedev Pushes Against Crypto Ban

The proposal by the Central Bank of Russia to exempt a variety of crypto-related operations from the legislation has caused a storm of criticism in Moscow. The Finance Ministry, which released its own regulatory idea, the State Duma, where lawmakers are working on a new crypto law, and the government, which collaborated with other ministries to create a roadmap for crypto regulation, are among the critics.

The Central Bank proposed banning the issuance, mining, and circulation of cryptocurrencies in the country in a report released on January 21 in order to mitigate the concerns posed by their proliferation.

In an interview with Russian media Tass, Dmitry Medvedev, who now serves as deputy chairman of the Russian Federation’s Security Council, recognized that the central bank’s position had its justifications. The central bank cites concerns to the country’s financial stability as well as risks to its citizens as justifications for its harsh stance on cryptocurrency.

According to Medvedev, the Bank of Russia’s recommendations for crypto regulation that seek to outlaw crypto-related activity may have the opposite impact of what is sought.

“To be honest, when you try to ban something, this very often leads to the opposite result.”

Crypto Market cap. Source: TradingView

Putin, according to Bloomberg, wants to “tax and regulate” cryptocurrency mining rather than outright outlaw it. “We also have some competitive advantages here,” Putin is supposed to have stated, “especially in the so-called mining.” “I mean the surplus of electricity and well-trained personnel available in the country.”

Putin’s position appears to be more nuanced than that of Russia’s central bank, which has called for the outlawing of all cryptocurrencies, despite the Ministry of Finance’s argument for regulating them instead. Putin, according to Bloomberg, has directed the central bank and the ministry to seek a deal.

Related article | Russian Law Enforcement Imprisons A Man For 3 Years For Stealing Cryptocurrency Mining Equipment

Other Officials Have Argued Against The Ban

Other Russian officials have recently highlighted worries that are more explicit. Minister of Digital Development Maxut Shadayev was reported in the business daily Vedomosti as saying that any limits on the issue and circulation of cryptocurrencies will hinder the development of the blockchain industry and go against the country’s objective of promoting the IT sector. He also said that a ban would result in a loss of skilled specialists.

The Russian Association for Electronic Communications (RAEC), which supports the finance ministry and the federal government, has also joined the fight against the Bank of Russia’s prohibition effort. A prohibition would not solve existing problems with fraud and other unlawful activities; rather, it would make control more difficult because market activity would shift to the “grey” sector. RAEC also remarked in a statement reported by the business news portal RBC:

According to data provided by RAEC’s experts, digital marketplaces contributed 6.7 trillion rubles (about $85 million) to the Russian economy in 2020. According to preliminary predictions from the organization for 2021, the indicator will have climbed by 29%, to 8.6 trillion rubles (about $110 million at current currency rates).

Russia isn’t the only government considering prohibiting cryptocurrency or enacting more stringent rules.

Earlier this year, India had a bill demanding a crypto ban reconsidered, while China announced a major crackdown on the crypto sector in 2021. Miners and large crypto companies were compelled to transfer to other countries as a result of the Chinese crackdown, which prohibited crypto mining and trade.

Although the US has not yet declared that it will take such action, industry insiders believe that the government will do so in the wake of recent revelations on the sector.

Related article | Russia Will Not Ban Crypto; Here’s Why!

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