Opinion: The Bank of Russia was late to ban cryptocurrencies

The Bank of Russia was far too late to adopt a hard prohibitive stance toward cryptocurrencies, as the market has grown significantly in recent years and there is no other path than regulation. ForkLog said this, citing Andrei Lugovoy, deputy chairman of the State Duma committee on security and anti-corruption.

According to the official, if the central bank had proposed banning cryptocurrencies and mining in 2016-2017, the regulator might have persuaded everyone very easily — due to low awareness of the technology, few market participants and the low price of crypto assets.

“But given that the number of people involved in these processes and the volume of financial resources has grown so much, we are simply obliged to regulate. We have no other way,” he said.

Dan Wolf, the managing director of Simoleon Long-Term Value, believes that the Bank of Russia’s desire to prohibit cryptocurrencies is linked to regulators’ fear of losing control. Also, in his view, the central bank fears capital flight from the country.

The Bank of Russia expressed concerns, that Russians’ investments in digital currencies deprive the economy of financing.

“I see the opposite — if there is liberalization of legislation around crypto and blockchain, then there will be enormous inflows of money into those enterprises that want to engage in blockchain,” Wolf said in ForkLog’s commentary.

Head of the State Duma committee on the financial market Anatoly Aksakov urged not to over-dramatize the situation and called the central bank’s report a good opportunity to start discussions:

“The Ministry of Finance’s position is milder [than the Central Bank’s], deputies have different views on this issue. I suppose that among the deputies there are also owners of [cryptocurrencies].”

He stressed that currently representatives of the cryptocurrency market themselves advocate regulation.

Andrei Lugovoy said that at this stage an expert group is being formed for discussions. It will include representatives of banks, exchange offices and crypto exchanges, miners and equipment manufacturers for mining cryptocurrencies, as well as developers and investors.

The Bank of Russia published a report in which proposed to ban the circulation of cryptocurrencies and their mining on the territory of the Russian Federation.

However, the restrictive stance is held only by the Bank of Russia — in the government, the State Duma and the security services there is advocacy for market regulation.

The Ministry of Finance has already prepared its own concept for regulating cryptocurrencies in Russia. ForkLog’s experts said that it is a positive sign for Bitcoin holders, but the proposed measures contradict the nature of digital assets and were likely designed for a particular player.

President Vladimir Putin urged the government and the Central Bank to reach a unified position on regulating the crypto industry.

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