On Friday, Bitcoin and Ethereum led a fresh wave of selling that resulted in over $700 million in liquidations after Russia’s central bank suggested a nationwide ban on the usage and mining of cryptocurrencies.
Russia’s central bank threatens to ban Bitcoin
The bank’s closure was prompted by a 5-page analysis that cited various concerns justifying the ban, including environmental issues, neighborhood well-being, and financial instability, according to ZyCrypto.
“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia.”
The bank’s conclusion is that given the overwhelming majority of cryptocurrencies are unbacked and thus hazardous to the Russian financial system, additional modifications to law are needed. The following measures could implement: the total prohibition of any type of cryptocurrencies-based payments; the limitation of cryptocurrencies’ circulation and issuance within Russian borders for any reason; and a ban on financial institutions buying bitcoin and related financial instruments.
It also calls for a complete prohibition of Bitcoin mining, claiming that “the current scale and further spread of cryptocurrency mining in the Russian Federation entail significant risks for the economy and financial stability.”
Bitcoin price falls below $40,000
Apart from cryptocurrency mining, the institution claims that it generates unproductive power usage that is opposed to the country’s environmental plan, as well as demand for mining-related infrastructure, which exacerbates the spread of cryptocurrencies and creates incentives to avoid regulation.
According to the report, the bank states that:
“In this regard, the Bank of Russia believes that the prohibition of cryptocurrency mining in Russia could be the best solution.”
After China banned crypto miners, Russia became the third biggest Bitcoin mining center, behind Kazakhstan and the United States. However, countries such as Kazakhstan are fighting back against cryptocurrency miners blaming frequent power outages on the industry, which is why nations like Russia are attempting to ban it.
With the Russian financial crisis continuing to wreak havoc on cryptocurrencies, Bitcoin has been hit particularly hard. The digital currency has shed over 7% in the past 24 hours and 42% since touching an all-time high. With the coin’s price currently falling to $39,108, specialists expect it to drop even further, perhaps approaching $35,000.
