Russian central bank looks to ban crypto investments

Don’t expect to find any crypto in the Kremlin.

Russia’s central bank is seeking to ban cryptocurrency investments, an escalation of the financial authority’s longstanding skepticism toward Bitcoin and other digital tokens. The ban would prevent future transactions, but would not force current holders to divest their portfolio.

Authorities in Russia have long held that cryptocurrencies can be used for money laundering and to finance terrorism. One source told Reuters that the bank’s current position is a "complete rejection" of all cryptocurrencies. (It is, however, working on a ruble-backed digital currency of its own and, in 2019, the country reportedly invested in crypto to limit the impact of sanctions for meddling in the 2016 U.S. election.)

The country’s central bank did give digital currencies legal status in 2020, however. But it prohibited using them as a means of payment.

As it contemplates this larger ban, the central bank issued new rules for mutual funds in Russia earlier this week, saying funds were prohibited from investing in cryptocurrencies or “financial instruments, the value of which depends on the prices of digital currencies.”

Crypto trading is a notable business in Russia. Annually, roughly $5 billion in crypto transactions take place—and one estimate shows that nearly 12% of the population already owns crypto (compared to a little over 8% of the U.S. population).

The possible crackdown comes on the heels of China ramping up efforts to ban crypto mining earlier this year. In September, that country’s central bank said all cryptocurrency transactions are illegal and must be banned.