Cryptocurrencies should be banned: this is the verdict of the Bank of Russia, the country’s central bank.
This casts a chill over the crypto space, which has driven the adoption of mainstream digital assets.
In a report, the institution says cryptocurrencies are volatile and widely used in illegal activities such as fraud.
By offering people an outlet to withdraw their money from the national economy, they risk undermining it and making it harder for the regulator to maintain optimal monetary policies, the report said.
The bank therefore said that Russia needs new laws and regulations to effectively ban crypto-related activities. The bank is not suggesting banning private crypto ownership, says Elizaveta Danilova, director of the Bank of Russia’s financial stability department.
This charge contributed to another dark day in the crypto market: the top 10 cryptos by market capitalization all fell sharply.
Bitcoin, the king of crypto, recently fell 10.5% to $38,502.95.
Ethereum, the second-largest crypto by market cap, fell 13% to $2,803.12, while binance coin was down almost 12%.
The new darlings of the crypto-sphere suffered as their ecosystems were deemed promising due to their potential uses: Cardano was down 15%, solana lost 16% of its value, while polkadot fell 14% and l avalanche fell 17%.
Meme coin dogecoin fell 10%.
Countries with a total ban on cryptocurrencies…
Nine countries – Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia – currently have a total ban on crypto, according to a November 2021 report from the Law Library of Congress.
“It should be noted that since the release of the 2018 report, the number of countries that have issued cryptocurrency bans has increased significantly,” the report said.
He added: “While the 2018 report identified 8 jurisdictions with an absolute ban and 15 jurisdictions with an implied ban, the November 2021 update identifies 9 jurisdictions with an absolute ban and 42 with an implied ban.”
Bangladesh has warned that cryptocurrency transactions “could violate the Prevention of Money Laundering Act 2012,” according to the report.
In Egypt, authorities have made it clear: “Individuals, banks and other financial institutions are prohibited from trading in cryptocurrencies,” according to a February 2019 report by global law firm Baker McKenzie.
The ban in Algeria “follows concerns expressed by parliamentarians that cryptocurrencies are mainly used to carry out illegal activities such as financing terrorism, drug trafficking, money laundering and tax evasion. “, says the Baker McKenzie report.
… but do they apply it?
Not really, although Algeria threatens criminal sanctions against any person or institution that violates the ban.
According to the Cambridge Center for Alternative Finance, the nine countries where crypto is banned control 0.19% of the bitcoin mining hash rate as of July 2021.
This means that they contribute about one-fifth of a percent of the total computing power of the network.
China, where more than half of all new bitcoins were minted through early 2021, according to CCAF data, is currently piloting a central bank digital currency, a virtual version of its yuan.
Crypto Implicitly Banned in 42 Other Countries
This means that their governments do not allow financial institutions to take companies or crypto holders as clients or even prohibit the operation of cryptocurrency exchanges, among other restrictions.
Some of these countries are part of economic zones that do not accept crypto, according to Decrypt.co. This is the case of Benin and Burkina, which are members of the Central Bank of West African States, which does not admit crypto within the economic zone.
This is also the case for Cameroon and Chad, which are members of the Economic and Monetary Community of Central Africa; CEMAC claims that since crypto-assets are not regulated within CEMAC, offering services related to crypto-assets is illegal.
Chad and Burkina Faso nonetheless accounted for the fifth and sixth highest peer-to-peer transaction volumes for bitcoin in Africa in September 2021, according to Useful Tulips.
Countries neighboring Russia also implicitly ban crypto. This list includes Georgia, Moldova, Tajikistan and Turkmenistan.
Even Kazakhstan, bitcoin champion in fact, has a 2020 law that only allows cryptocurrencies backed by other assets – stablecoins.
But the country views bitcoin as a commodity and has thus become one of the host countries for bitcoin miners forced to leave China.
The share that the country occupies in the mining world has exploded.