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Russia Doesn’t Plan In Following China’s Footstep In Banning Crypto Outright, Says Deputy Finance Minister

Sayan Dutta by Sayan Dutta
October 26, 2021
in Business
Reading Time: 4 mins read
Banning Crypto
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As the cryptocurrency and bitcoin train continues to run through countries’ tracks, upsetting the traditional financial systems and changing the money game, governments across the world are either banning Redot crypto exchange from operating in their countries or outrightly stopping the use of bitcoin or any other cryptocurrency in their countries. Others go as far as labelling anyone who is seen doing any form of crypto-related business, whether it is trading, mining or accepting cryptocurrency for payment as criminal.

While the roadblocks to bitcoin’s adoption as currencies, and its legitimacy is threatened, there is some positive news.

Russia has said, through its deputy finance minister, that Russia won’t be as harsh to cryptocurrency and its users in the same way China was. The Deputy finance minister, Alexey Moiseev, said that Russia will not crackdown on citizens who use cryptocurrency outside the country.

So, before we unpack what Moiseev said, let us look at the countries that have banned cryptocurrencies:

  1. China
  2. Algeria
  3. Bolivia
  4. Colombia
  5. Egypt
  6. Indonesia
  7. Iran
  8. Iraq
  9. Nepal
  10. North Macedonia
  11. Russia
  12. Turkey
  13. Vietnam

These countries banned cryptocurrencies for various reasons, but the country’s ban that caused a ripple effect in the cryptocurrency space and across other countries is China.

Table of Contents

  • WHAT ARE THE IMPLICATIONS OF CHINA’S BAN ON CRYPTOCURRENCY?
  • WHEN AND WHY DID RUSSIA BAN CRYPTOCURRENCY?
  • DECLINING INTEREST IN BITCOIN-MARGINED FUTURES PROMISES LESSER PRICE VOLATILITY
  • WHAT ARE THE IMPLICATIONS OF A LESS VOLATILE MARKET?
  • WHAT IS NEXT FOR RUSSIA?

WHAT ARE THE IMPLICATIONS OF CHINA’S BAN ON CRYPTOCURRENCY?

China, through the People’s Bank of China, on 21st September 2021, announced that they were cracking down on every form of bitcoin and cryptocurrency-related activities in the country, calling them “illegal activities”. China’s ban of cryptocurrency and any crypto transactions caused many miners in the country to flee as the government was determined to stop everything crypto-related.

The ban came after the government, in the past, had banned some crypto activities. The ban, many analysts say, was implemented and enforced with rigour because China planned to roll out its digital currency, Digital Yuan. Then there is the climate issue with bitcoin mining.

China wants to reduce its carbon footprint; therefore, it needed to clamp down on mining.

But that doesn’t explain their ban on everything that relates to cryptocurrency.

The price of bitcoin fell by 4% in 24 hours after the announcement by the Chinese government. Many investors in China were scrambling to safeguard their investment.

The price fall in the crypto market, on exchanges such as Redot.com, was not far fetched. Given China’s population and the size of its crypto market, the announcement was bound to send ripples across the cryptocurrency space.

China’s actions also raised alarm bells across the cryptocurrency space as marker sentiments were feared to be swinging towards a bearish market. Climate change issues have always been a cause of concern for cryptocurrency enthusiasts and investors, especially after Elon Musk, CEO of Tesla, raised concerns about bitcoin’s impact on the environment.

Investors and traders also fear that the crypto market will be hit when other countries take a cue from China and do the same: banning all cryptocurrency activities. The impact of such decisions on the crypto market, especially if it comes from a powerhouse like the USA, is staggering, many feared.

But so far, other countries have not followed the Chinese’s government’s line.

If anything, countries like Russia, which had banned cryptocurrency in January, are taking a subtler stand against cryptocurrency.

WHEN AND WHY DID RUSSIA BAN CRYPTOCURRENCY?

The Russian ban on crypto is somewhat similar to China’s ban on crypto. The ban didn’t happen at once.

The Russian government, in March 2020, updated its anti-bribery and AML laws. The ban came after it was alleged that the Federal Security Service (FSB) tried to extract a bribe that was worth $1 million from a media mogul through bitcoin transactions. The anti-bribery and AML laws banned cryptocurrencies because “it can be used to facilitate illegal activities such as bribes…”

The government believes that finance crypto was a vehicle for financial crimes in the country.

On January 1st, 2021, the government announced that cryptocurrency will be allowed in Russia — trading – but not as a currency for the exchange of value.

The law means that Russians can mine and trade cryptocurrency on cryptocurrency exchanges but not buy goods or pay for services with cryptocurrency.

A decent option for the millions of cryptocurrency traders, investors and enthusiasts in Russia.

The ban on cryptocurrency in Russia, many analysts have said, is more nuanced than meets the eye. And this sentiment is the same for other countries that have banned cryptocurrencies: bitcoin and cryptocurrency are bad, it fuels financial criminal activities, but blockchain technology is good.

DECLINING INTEREST IN BITCOIN-MARGINED FUTURES PROMISES LESSER PRICE VOLATILITY

Traders have turned to stablecoins as collateral when trading futures contracts. Coin-margined futures have been experiencing low numbers since May, while stable coin-margined futures have increased significantly in the same period.

Coin-margined futures contracts open interest – futures contracts that were traded but completed – has fallen below 50%.

With these reductions in bitcoin-margined futures, the price volatility is reduced, and confidence in the market increases.

WHAT ARE THE IMPLICATIONS OF A LESS VOLATILE MARKET?

One of the drawbacks for many investors in cryptocurrency is the high volatility of cryptocurrency. A highly volatile and unregulated financial market is scary because investors can lose money as fast as they make it.

With high volatility in the crypto market, investors would rather invest in other secure assets such as bonds and stocks instead of cryptocurrency.

But with a relatively stable bitcoin price, more investors will be lured into the cryptocurrency space, thus leading to more money in the space, and increased prices.

WHAT IS NEXT FOR RUSSIA?

The Russian government has kicked against accepting bitcoin as currency because it fears that it will have a negative impact on Russian Ruble.

So, taking advantage of blockchain technology, the Russian government developed its digital currency, the digital Ruble.

Some Russian officials have expressed confidence in the digital Ruble to stand the test of time and be a better option to BTC and other cryptocurrencies. Their sentiment, according to the Russian State Duma Committee chairman, Anatoly Aksakov, is that the digital currency would become an important part of national settlements in 2024.

Russia has shown that the future of money is in cryptocurrencies, whether it is bitcoin or Ethereum or the Russian Central bank digital currency.

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Sayan Dutta

Sayan Dutta

I am glad you came over here. So, you want to know a little bit about me. I am a passionate digital marketer, blogger, and engineer. I have knowledge & experience in search engine optimization, digital analytics, google algorithms, and many other things.

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