Russian Central Bank Official Says It ‘Does Not Support’ Circulation of Cryptocurrency in Country as Potential Ban Looms

By Katabella Roberts
Katabella Roberts
Katabella Roberts
Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.
December 17, 2021 Updated: December 17, 2021

The Russian central bank has stepped up in its campaign against cryptocurrency investments in the country ahead of a possible ban, according to a Reuters report.

Valeriy Lyakh, head of the country’s central bank department for countering market misconduct, said in a video that investment in cryptocurrencies was an “out-and-out swindle” and a “financial pyramid” while pointing to the market’s lack of regulation and volatile nature. Lyakh also noted that manipulation of the market was yet to be investigated.

“We have a negative attitude towards cryptocurrencies. We definitely do not support any circulation of it in our country,” Lyakh said in the video, as per Reuters, who previously reported that officials had met to discuss a potential ban on cryptocurrency investments in the country.

The Epoch Times has been unable to independently verify the video.

A spokesperson from the Central Bank told Reuters that it was preparing an advisory report to set out its stance on the issue but did not elaborate further.

It comes after the Central bank, the country’s chief financial regulator, on Monday issued new rules for its mutual funds with regards to digital currency, noting that the Bank has previously recommended not to invest in such assets.

As per the directive, “a ban is established on the investment of funds of mutual funds, including those intended exclusively for qualified investors, in digital currencies and financial instruments, the cost of which depends on the rates of digital currencies.”

Russia declared that digital currencies were allowed in the country in 2020 but bank officials have been vocal about their opposition to them, pointing to the potential threat of it being used for money laundering or to finance terrorism, among other things. Currently, cryptocurrencies cannot be used as a means of legal payment for goods and services.

In July, the bank banned Russia’s stock exchanges from listing financial instruments that are dependent on the prices of digital assets, according to Coindesk, who cited a July 19 letter (pdf). The letter also said that the bank’s mutual funds should not associate with such products either.

In a similar move, China’s central bank in September declared all cryptocurrency-related transactions illegal and that services offering trading, order matching, token issuance, and derivatives for virtual currencies are strictly prohibited.

Overseas crypto exchanges providing services in mainland China are also illegal, The People’s Bank of China said.

However, Russia’s Central bank is currently working on its own form of official digital currency, CBDC, which it had planned to launch in a pilot program in December before extending the deadline.

In November, the central bank’s governor, Elvira Nabiullina, told Reuters that a prototype will be created in “early 2022” and will be tested in a pilot program before a decision is made as to whether or not it should be launched in production.

Meanwhile, Russian President Vladimir Putin appears to have a more open-minded stance on digital currencies, and told CNBC in an interview that was posted on the Kremlin’s website in October that cryptocurrency “has the right to exist and can be used as a means of payment.”

However, the president told CNBC that it was too soon to begin discussions about whether or not it may be used for trading oil, a key export in Russia, and other commodities.

“Cryptocurrency is not supported by anything as of yet,” Putin said. “It may exist as a means of payment, but I think it’s too early to say about the oil trade in cryptocurrency.”

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.