Russian central bank keeps cryptocurrency hostility despite Western sanctions

CBR states 'there is nothing to add' despite Western sanctions

Cryptocurrencies could become a lifeline for Russians - Photo:Shutterstock

The significant and far-reaching sanctions imposed by Western governments against Russia following its invasion of Ukraine have done little to change the attitude of the nation’s central bank toward cryptocurrencies.

CBR vs ministry

In recent months, the Central Bank of Russia (CBR) found itself in a continued struggle with the Russian finance ministry over how cryptocurrency should be regulated. The former called for an outright ban, describing the burgeoning sector as a threat to monetary sovereignty, while the latter pushed for more rigid certification and annual limits on retail activity.

A week before the invasion, the finance ministry pushed ahead with draft legislation that would treat cryptocurrency in the same manner as foreign currency.

According to Russian news outlet Tass, the Central Bank of Russia reaffirmed its opposition to cryptocurrencies last week, despite the sudden devaluation of the Russian rouble that followed Russia’s invasion.

It stated: “The CBR supports the position that was previously announced and published on the official website. Therefore, there is nothing to add today.”

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In light of the rouble’s volatility, reports of runs on banks in some Russian cities and the likes of PayPal, Mastercard and Visa all announcing their intention to withdraw services from Russia, cryptocurrencies have been identified as a potential alternative for everyday citizens.

In response to Ukrainian calls for exchanges to freeze the accounts of Russian and Belarusian users, Coinbase CEO Brian Armstrong recently stated: “Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing and a ban would hurt them, too.”

According to crypto research firm Kaiko, bitcoin/rouble trading volume reached a nine-month high following the start of what Russian president Vladimir Putin called the “special military operation.”

Eleven days later, however, this trend seemed to have reversed. A report by Chainalysis indicated that trading volume on Russian exchanges had fallen by over 50% a week.

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