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Russia declares crypto-war, forcing cryptocurrency values to plummet
As the market responds to reports that Russia is pursuing a ban on cryptocurrency trading and mining, key cryptocurrencies have suffered losses of more than 20% in a week.
In less than five days, the value of one Bitcoin fell from $US43,293.80 to $US33,629.50, a 22% reduction, after the Central Bank of Russia recommended a wide ban on cryptocurrencies, which it compared to a pyramid scheme based on energy-intensive crypto mining activities.
The volatility of cryptocurrencies poses risks that are "much higher for emerging markets, including Russia," according to the bank, which recommends that financial institutions be barred from using cryptocurrencies for any transactions and that the exchange of crypto for fiat currencies be prohibited.
Individuals would not be prohibited from having cryptocurrencies, according to sources, which stated that Russians presently trade roughly $7 billion ($5 billion) in digital assets.
Crypto exchanges, on the other hand, would be prohibited from functioning within the country, and the Central Bank of Russia would collaborate with regulators in other countries to monitor Russian individuals' crypto transactions.
Governments are increasingly interested in monitoring bitcoin in order to eliminate the anonymity that has allowed cryptocurrency to become the de facto money of the cybercriminal underground.
Since 2019, the Australian Taxation Office (ATO) has used data matching to track down cryptocurrency transactions.
Whatever its promise to deter criminals, the planned ban sparked criticism from Russian tech titans such as Telegram founder Pavel Durov, who highlighted that "no developed country bans cryptocurrencies" and that "such a prohibition will surely slow down the development of blockchain technology in general."
"These technologies improve the efficiency and safety of many human activities," he continued, noting that Russia is "one of the leaders in terms of the number of highly qualified specialists in the blockchain industry" and warning that a ban "will result in an outflow of IT specialists from the country and the destruction of a number of sectors of the high-tech economy."
"While such a restriction is unlikely to deter unethical players, it will effectively kill legal Russian ventures in this field."
Instability is being addressed
Crypto investors first dismissed the proposed ban as a non-event, claiming that the market will absorb the news without incident – nevertheless, the fast decrease in Bitcoin, an industry bellwether, reveals that the proposed ban has shook many cryptocurrency investors.
Russia has joined a limited handful of countries that have taken steps to restrict or outright ban cryptocurrencies, including Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China, which declared crypto trading to be "illegal financial operations" in September.
42 other nations have restricted bank trading in cryptocurrencies, with some doing so for practical reasons: Iran's recent stoppage of crypto mining until 6 March, for example, was linked to the need to limit the risk of blackouts during the country's chilly winter.
Despite the protests, there are signs that miners have proven adept at adapting to change: for example, following China's cryptocurrency prohibition, neighbouring Thailand experienced a surge in crypto mining.
Other countries, including Australia, are expanding official oversight of cryptocurrency transactions and their role in the larger financial system.
Treasurer Josh Frydenberg indicated in December that the government would undertake legal reform relating to cryptocurrencies in 2022, with consultations expected to conclude by mid-year.
The move comes only weeks after the Commonwealth Bank of Australia announced a partnership with cryptocurrency exchange Gemini to allow CBA users to purchase and sell bitcoin assets via its online banking app.
"The development and increasing demand for digital currencies creates both difficulties and opportunities for the financial services sector," said CBA CEO Matt Comyn, emphasising the importance of "capacity, security, and confidence in a crypto trading platform."
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By Crypto PiratesAs the market responds to reports that Russia is pursuing a ban on cryptocurrency trading and mining, key cryptocurrencies have suffered losses of more than 20% in a week.
In less than five days, the value of one Bitcoin fell from $US43,293.80 to $US33,629.50, a 22% reduction, after the Central Bank of Russia recommended a wide ban on cryptocurrencies, which it compared to a pyramid scheme based on energy-intensive crypto mining activities.
The volatility of cryptocurrencies poses risks that are "much higher for emerging markets, including Russia," according to the bank, which recommends that financial institutions be barred from using cryptocurrencies for any transactions and that the exchange of crypto for fiat currencies be prohibited.
Individuals would not be prohibited from having cryptocurrencies, according to sources, which stated that Russians presently trade roughly $7 billion ($5 billion) in digital assets.
Crypto exchanges, on the other hand, would be prohibited from functioning within the country, and the Central Bank of Russia would collaborate with regulators in other countries to monitor Russian individuals' crypto transactions.
Governments are increasingly interested in monitoring bitcoin in order to eliminate the anonymity that has allowed cryptocurrency to become the de facto money of the cybercriminal underground.
Since 2019, the Australian Taxation Office (ATO) has used data matching to track down cryptocurrency transactions.
Whatever its promise to deter criminals, the planned ban sparked criticism from Russian tech titans such as Telegram founder Pavel Durov, who highlighted that "no developed country bans cryptocurrencies" and that "such a prohibition will surely slow down the development of blockchain technology in general."
"These technologies improve the efficiency and safety of many human activities," he continued, noting that Russia is "one of the leaders in terms of the number of highly qualified specialists in the blockchain industry" and warning that a ban "will result in an outflow of IT specialists from the country and the destruction of a number of sectors of the high-tech economy."
"While such a restriction is unlikely to deter unethical players, it will effectively kill legal Russian ventures in this field."
Instability is being addressed
Crypto investors first dismissed the proposed ban as a non-event, claiming that the market will absorb the news without incident – nevertheless, the fast decrease in Bitcoin, an industry bellwether, reveals that the proposed ban has shook many cryptocurrency investors.
Russia has joined a limited handful of countries that have taken steps to restrict or outright ban cryptocurrencies, including Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China, which declared crypto trading to be "illegal financial operations" in September.
42 other nations have restricted bank trading in cryptocurrencies, with some doing so for practical reasons: Iran's recent stoppage of crypto mining until 6 March, for example, was linked to the need to limit the risk of blackouts during the country's chilly winter.
Despite the protests, there are signs that miners have proven adept at adapting to change: for example, following China's cryptocurrency prohibition, neighbouring Thailand experienced a surge in crypto mining.
Other countries, including Australia, are expanding official oversight of cryptocurrency transactions and their role in the larger financial system.
Treasurer Josh Frydenberg indicated in December that the government would undertake legal reform relating to cryptocurrencies in 2022, with consultations expected to conclude by mid-year.
The move comes only weeks after the Commonwealth Bank of Australia announced a partnership with cryptocurrency exchange Gemini to allow CBA users to purchase and sell bitcoin assets via its online banking app.
"The development and increasing demand for digital currencies creates both difficulties and opportunities for the financial services sector," said CBA CEO Matt Comyn, emphasising the importance of "capacity, security, and confidence in a crypto trading platform."
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