What's Happening? Russia Reportedly Follows China's Lead to Revive "Comprehensive Ban on Cryptocurrency Circulation" Plan

Russian legislators have reintroduced plans to ban the circulation of cryptocurrencies within the country, with certain exemptions included in the proposed ban. Foreign media report that this move is intended to clear the way for the digital ruble.

China had previously issued bans on Bitcoin and cryptocurrency mining, and the Russian Central Bank had also proposed a comprehensive ban on cryptocurrencies. However, Russia remains the third-largest Bitcoin mining nation, following the U.S. and China.

Despite Russia's significant share in Bitcoin computing power, this has not stopped legislators from re-proposing the previous plan to ban the circulation of cryptocurrencies in the country, creating uncertainty for digital asset users.

According to local media reports, Russian State Duma deputy Anatoly Aksakov has reintroduced a proposal to ban the circulation of private cryptocurrencies starting from September 1.

However, the proposal will exclude cryptocurrency miners, mining pools, and central bank "pilot projects," suggesting that the move aims to promote the digital ruble.

Although the proposed bill has not yet passed in the lower house of parliament, Aksakov's tone is decisive, stating that "the decision has already been made."

He explained that since cryptocurrencies are a type of "quasi-currency," there needs to be a ban on their circulation, but only the ruble can serve as Russia's currency.

The re-proposal of the plan comes after the Beribit exchange was attacked at the end of March. Russian authorities claim that the exchange transmitted funds related to a terrorist attack at Crocus City Hall, which resulted in the death of 137 concertgoers by four gunmen.

Beribit users subsequently reported that their accounts had been frozen, and when they demanded the return of their cryptocurrency funds in person, they were given chocolate and promises of account restoration.

With Russian cryptocurrency users facing great uncertainty in the future, Aksakov clearly stated that the country's digital asset ambitions depend entirely on the digital ruble.

Russia is actively promoting its central bank digital currency (CBDC), and the country's central bank recently revealed that the CBDC trial has completed 25,000 transactions, 19,000 of which were between individuals.

Unlike other currencies, the digital ruble features a dynamic QR code that can be used for merchant payments, online purchases, business-to-business transfers, and even basic smart contract functionalities.

The pilot began in August 2023, involving 12 banks, 600 users, and 30 retailers across 11 cities. The Russian Central Bank expects to launch the final version of the digital ruble by 2025.

Previous reports suggested that Russia planned to use private cryptocurrencies like Bitcoin as an alternative to the dollar for settling international trade after sanctions.

Market analysts believe that banning cryptocurrencies could lead to the creation of an underground market.

If the ban is enacted, Russian miners and mining pools will be forced to sell Bitcoin to non-Russian entities.

Aksakov's plan indicates that as digital assets spread globally, Russia is determined to maintain currency control and sovereignty. In addition to hindering the adoption and innovation of cryptocurrencies within Russia, this situation also highlights the broader power struggle between decentralized and centralized currencies.