Note that the CBR's position was announced late last week. In the end, it came down to the fact that regulators do not want to see cryptocurrency circulation and mining on the territory of the state. Citizens are not prohibited from owning digital assets - they will just have to use foreign platforms like cryptocurrency exchanges to do so. Read more about this in a separate article.


Prospects for a ban on cryptocurrencies in Russia

As a reminder, Russia already has a Law on Digital Assets, which does not consider Bitcoin and altcoins to be legal tender. Its passage in the State Duma was expected news for many domestic investors, but unfortunately, the law has failed to bring clarity to cryptocurrency regulation.

In the meantime, the Central Bank can "cut the knot" in the problem without solving it at all, i.e. ban cryptocurrencies altogether. This was hinted at last year by Elvira Nabiullina, the Central Bank chairman since 2013. According to a recent statement by representatives of the Bank of Russia, cryptocurrencies allegedly "carry huge risks" for ordinary investors, so restricting their circulation is necessary.

Central Bank of Russia Governor Elvira Nabiullina

Many people – and Pavel Durov in particular – did not like the radical proposal. He published an appeal on Telegram criticizing the Central Bank’s actions. Here is one of his quotes, published by Cointelegraph.

A ban on cryptocurrencies, proposed by the Central Bank of Russia, would lead to an outflow of IT professionals from the country and destroy a number of high-tech industries.

That is, in the entrepreneur's opinion, there is no point in such actions. Moreover, the statement about the possible outflow of experts seems logical - after all, the latest position of the Central Bank of the Russian Federation implies a ban on the use of Russian infrastructure for communication with digital assets. This means that certain companies from this sector will simply not be able to operate.

While Durov acknowledged that “the desire to regulate the circulation of cryptocurrencies is natural on the part of any financial authority,” he also noted that “such a ban is unlikely to stop unscrupulous market participants” from their actions. This, in turn, would destroy any endeavours by creators of legal crypto projects in Russia.

Indeed, it would be possible to interact with crypto and use it for illegal purposes even in case of a total ban on coins. However, they are decentralized, which means that the blockchains of the respective projects will continue to operate under any circumstances. In order to shut them down, the nodes - the software that ensures that the network works properly - would need to be physically disabled or destroyed. And to do that, they still need to be found, as most popular cryptocurrency nodes can be run by just about anyone willing to do so.

Leonid Volkov, one of the leaders of Alexei Navalny’s team, also expressed his outrage. In his statement, Volkov referred to a publication by Bloomberg news portal, which claimed that the Russian Federal Security Service (FSB) had played an important role in promoting the ban. The reason for this was that cryptocurrency could be used to finance “non-systemic opposition and extremist organisations”.

One of Navalny’s team leaders, Leonid Volkov

Volkov is confident that this version of events is “more likely to be true,” but it will not go beyond warnings and threats. Here is his rejoinder.

Globally, what Nabiullin is trying to do is Luddism, the struggle against technology and technological progress. Luddism is doomed.

In other words, with the most negative outlook, Russian investors should prepare for a significant increase in commissions when converting conventional currency to crypto and back. This is due to the fact that such transactions are likely to be conducted through foreign jurisdictions. But in general, a complete ban on digital assets is not possible because of the decentralised nature of the market and the popularity of Bitcoin, along with other coins. It is therefore unlikely that much progress will be made on this issue.


We believe that this position by the Central Bank does seem to be too harsh. This is especially important given that it will be quite difficult to implement the ban in practice. Well, since citizens are allowed to own coins and store them on foreign platforms, in fact such an initiative would hardly rectify the current situation.


What do you think about it? Share your opinion in our millionaires’ cryptochat. There we will talk about other topics related to the world of blockchain and decentralisation.