Legalizing Crypto Will Undermine Russian Financial System, Warns Central Bank

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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Legalizing crypto could “fundamentally” undermine Russia’s financial system, the nation’s Central Bank has warned.

According to the media outlet Informer, Elizaveta Danilova, the bank’s Director of Financial Stability, said that allowing crypto into the Russian financial system would bring about “fundamental risks.”

The Ministry of Finance wants to legalize crypto – and regulate the use of tokens in the country. Crypto currently has no legal status in the nation, and trading tokens is neither illegal nor regulated.

But Danilova warned that “legalization” could “harm the well-being of citizens.” She said that it could also compromise the stability of the financial system and “pave the way” for an influx of illegal activities.

However, Danilova suggested that Central Bank was not opposed to allowing the use of crypto in international settlements. The bank could yet approve the legalization of crypto mining. But, crucially, the bank wants miners to exchange their coins on international trading platforms – and keep them out of the Russian economy.

The Central Bank’s long-serving Governor, Elvira Nabiullina, recently said that she had not changed her mind about crypto.

She stated that the bank had a “negative attitude towards the use of cryptocurrency in the domestic market.” Nabiullina, a long-standing crypto critic, also said she opposed the use of tokens “in internal settlements.”

What Is Russian Central Bank’s Problem with Crypto?

The bank is currently fast-tracking the development of the digital ruble – with a major public-private sector pilot set to begin on April 1.

Meanwhile, domestic media outlets are reporting that more Russians than ever are using crypto as a payments tool – in a bid to circumvent international sanctions.

The media outlet Izvestia reported that per local experts, many Russians have been making use of “semi-legal” crypto exchanges in “Europe” and “other parts of the world” to move funds around.

Alexey Tarapovsky, the founder of the Anderida Financial Group, said:

“The popularity of using crypto to pay for purchases abroad has increased.”

Tarapovsky explained that “most often” Russians use tokens to “buy electronics, computer games, apps, and real estate.”

Last month, Izvestia also reported, Binance revealed that more than 21% of crypto owners in Commonwealth of Independent States (CIS) countries – former Soviet bloc nations – said they use their tokens to pay for goods and services.