Russia’s Crypto Ban May Have Opposite Effect, Warns Medvedev As Opposition Rises Against Proposal

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Dmitry Medvedev, former President and Prime Minister of Russia, has expressed concern over the Bank of Russia’s move to ban most crypto operations. The ban could have the opposite result, the Russian politician warned, joining a chorus of opinions against the restrictive policy.

More Officials and Organizations Reject Central Bank’s Call to Ban Cryptocurrency

The Central Bank of Russia’s proposal to place a number of crypto-related activities outside the law has sparked a flurry of backlash in Moscow. Among the critics are the Ministry of Finance which has presented its own concept of regulation, the State Duma where deputies are working on a new law on cryptography and the government which has prepared a roadmap for the regulation of cryptography with various departments.

The central bank’s position has its reasons, acknowledged Dmitry Medvedev, who is now deputy chairman of the Security Council of the Russian Federation, in an interview with Russian media. The monetary authority cited threats to the country’s financial stability and risks to its citizens as key factors behind its hardline stance on crypto. However, quoted by Tass, Medvedev warned:

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

Other Russian officials have recently expressed more specific concerns. Any restrictions on the issuance and circulation of cryptocurrencies would halt the development of the blockchain industry and run counter to the country’s policy of supporting the IT sector, said Minister of Digital Development Maxut Shadayev , quoted by the economic daily Vedomosti. A ban would also lead to the flight of qualified specialists, he added.

The Russian Association of Electronic Communications (RAEC) has also joined the front against pressure from the Bank of Russia for the ban while supporting the Ministry of Finance and the federal government. A ban would not solve existing problems of fraud and other illegal acts but, on the contrary, it would complicate control as market activity will shift to the “grey” sector, the industry organization noted. In a statement quoted by the RBC business news portal, RAEC also said:

The ban on the circulation of cryptocurrencies will leave Russia on the sidelines of the development of one of the fastest growing digital markets today, which will significantly slow down the innovative development of the country.

According to data compiled by RAEC experts, the contribution of digital markets to the Russian economy amounted to 6.7 trillion rubles (over $85 million) in 2020. The association’s preliminary estimates for 2021 suggest that the indicator rose by 29%, reaching 8.6 trillion rubles. (approximately $110 million at current exchange rates).

Meanwhile, the head of the State Duma’s Financial Markets Committee, Anatoly Aksakov, publicized the idea of ​​legalizing cryptocurrencies under the Russian law “On Experimental Legal Regimes in the Field of Innovations digital”. This would allow authorities to examine how different pieces of crypto infrastructure operate under tight government control, Aksakov explained at a conference devoted to crypto regulation.

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Do you think Russia will eventually legalize cryptocurrencies and transactions with them? Share your expectations in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: “Being a writer is who I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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