Russia’s recent ban on cryptos has attracted criticism from several big names, including Telegram founder Pavel Durov and Alexei Navalny’s chief of staff Leonid Volkov. On January 20, Russia’s Central Bank published a report that proposed a blanket ban on domestic crypto mining and trading.
The report said that the risks of cryptocurrency are “much higher for emerging markets, including Russia.” Telegram CEO Pavel Durov wrote in a post on his messaging platform that this blanket ban on crypto:
“Would destroy many sectors of the high-tech economy.”
Nonetheless, it seems that the proposed ban is not universally accepted in the nation. A January 22 post by Durov stated that the proposed widespread ban on cryptocurrency would “destroy a number of sectors of the high-tech economy.” He added:
“Such a ban will inevitably slow down the development of blockchain technologies in general. These technologies improve the efficiency and safety of many human activities, from finance to the arts.”
“The desire to regulate the circulation of cryptocurrencies is natural on the part of any financial authority. Such a ban is unlikely to stop unscrupulous players, but it will put an end to legal Russian projects in this area.”
Leonid Volkov: banning crypto is “impossible”
In the meantime, in a Telegram post on January 20 Volkov, the chief of staff for Alexei Navalny, wrote that the ban might be like “calling a spade a spade.”
Navalny is an opposition leader in Russia who is the founder of The Anti-Corruption Foundation (FBK). In August 2021, he was poisoned with the nerve agent Novichok. After he recovered in Germany, he returned to Russia in January 2021 where he got arrested and has now remained imprisoned ever since.
During his announcement, Volkov referenced a January 20 report by Bloomberg. It alleged that Russia’s Federal Security Service (FSB) played a major role in advancing the ban since crypto can be used to pay for “non-systemic opposition and extremist organizations.”
He then added that he was sure that the Bloomberg version is 100% close to reality. However, nothing is expected to happen since Russians are highly likely to use cryptocurrency to acquire drugs instead of donating them to the Moscow-based non-profit FBK.
“Technically, banning cryptocurrency is the same as banning person-to-person transfers (i.e. it’s impossible)… Yes, they can make it very difficult to deposit funds on crypto exchanges, which means that intermediary services will simply appear that will do this through foreign jurisdictions. Yes, transaction costs will rise. Well, that’s all, I guess.”
Most of the Russian neighbors have taken a hard stand on crypto. On January 19, citizens in Georgia were pushed to swear an oath to stop mining cryptocurrency. The governments of Kazakhstan and Kosovo have also recently been added to the list of nations that have banned crypto mining activities.
Maybe one exception is Ukraine which passed several laws to facilitate the nation’s adoption of cryptos in September last year.