Russia's central bank is reportedly considering a ban on both the use and mining of all cryptocurrencies within the country.
According to a report from Reuters, the nation's chief financial institution has growing concerns over the expanding creation and use of the digital currency within its borders, despite having given Bitcoin and others like it legal status in 2020.
In a new report obtained by the news site, the central bank warns that current trends in cryptocurrency growth resembled a "financial pyramid," or the type of fiscal structure that could result in extreme volatility and monetary bubbles forming and collapsing.
The bank is not only concerned about the negative impact such unpredictability could have on Russia's citizens but also the impact crypto's growth could have on the country's monetary sovereignty, Reuters said.
One of the main purposes of the creation of Bitcoin and its derivatives was to wrest the control of currencies away from national governmental organizations. It appears the progress cryptocurrency has made in doing just that within Russian borders has reached the point where the country's finance decision-makers are growing deeply concerned over their ability to continue controlling currency.
In addition to all of these issues, Russia also apparently shares the worries over crypto mining's impact on the environment that so many other countries are currently grappling with. Reuters noted that Russia accounted for 11.2% of the world's hashrate as of last August, placing it third in crypto mining volume behind the US and Kazakhstan.
The massive amount of electricity required to power the mining rigs that drove this hashrate is likely a worrisome drain for a country that has already had historical struggles with electrical power, fossil fuel consumption, and resource management.
According to the report, Russia's next steps could be to mirror countries like China, which banned all domestic mining and crypto-based transactions recently. The bank also apparently plans to ally with regulators in other countries to track Russians' use of international crypto exchanges as a way to skirt any planned prohibitions.
While Russia's central bank doesn't want external individuals or organizations to control digital currency within the country, it is apparently planning to launch its own digital Ruble in an effort to modernize its financial system, speed up payments, and usurp any chance of independent digital currencies might have to gain a stronger foothold, Reuters said.