According to the Russian Finance Ministry, cryptocurrency should not be legal tender

As the country moves forward with crypto regulatory plans, Russia’s finance ministry opposes making bitcoin legal tender.

  • The Russian Ministry of Finance has released information about the proposed cryptocurrency law.
  • The announcement comes at a time when tensions between Russia and Ukraine are rising.

Cryptocurrencies should not be granted legal currency status and should only be used as an investment vehicle, according to the Russian finance ministry.

The recommendation is part of a draught cryptocurrency law presented to the Russian Parliament on February 18. The proposal by the finance ministry reinforces Russia’s current policy of prohibiting the use of cryptocurrencies as a form of payment.

The bill is primarily concerned with defining regulatory requirements pertaining to exchanges. It also proposes that citizens interested in purchasing and holding digital assets go through a screening process that assesses their knowledge of the technology as well as the associated investment risks.

The announcement refers to the ongoing controversy in the country surrounding cryptocurrencies. According to the Ministry of Finance, the Bank of Russia, the country’s central bank, has proposed that all cryptocurrency mining, issuance, and circulation be prohibited in the country.

“The proposals received from the Bank of Russia will be taken into account in further work on the draught law insofar as they do not contradict the approaches of the Russian Ministry of Finance,” the Ministry said in the English-language release.

The move comes as growing concerns about Russia-Ukraine conflict put pressure on risk assets. Bitcoin and ether have dropped about 11% and 5% in the last week, respectively, as fears of a war in Eastern Europe grow.

Analysts are confident, however, that the market will be able to withstand the geopolitical forces at work as long as things do not deteriorate. In a recent note, Tom Essaye, founder of Sevens Report Research, compared the situation to Russia’s 2014 invasion of the Crimean Peninsula, which was once part of Ukraine.

“Analysts believe Russia is laying the groundwork for an invasion of Donbas [in eastern Ukraine] and annexation of a portion of the territory,” Essaye said. “Would that be considered a materially bearish event?” No, not unless it sparks a full-fledged war between Ukraine and Russia (which remains unlikely).”

The announcement from the Ministry of Finance made no mention of how the current situation in Russia which is facing an increasingly harsh battery of economic sanctions imposed by Western nations in an attempt to dissuade Putin from invading Russia may affect the future of the crypto bill.

Some speculate that Russia will accelerate the development of a digital currency to help mitigate the impact of the sanctions.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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