If the suggested move is adopted, it could disrupt the burgeoning virtual money sector as Russia is one of the largest crypto-mining nations in the world.

Russia granted cryptocurrencies legal status in 2020, but their use in payments was never authorised.
Russia granted cryptocurrencies legal status in 2020, but their use in payments was never authorised. (Reuters)

The Russian central bank has proposed cracking down on cryptocurrencies. 

The Bank of Russia called on Thursday for reinforcing a ban on cryptocurrency payments, prohibiting crypto-mining and tightening laws on trading virtual money.

"The use of cryptocurrencies creates significant threats to the well-being of Russian citizens and the stability of the financial system," a report published by the central bank said.

It added that the swift growth of cryptocurrencies is driven by "speculative demand" that leads to the forming of a "bubble".

The report added that cryptos resemble financial "pyramid schemes" because their value increases with the emergence of new players on the market.

It estimated the annual transaction volume of Russian citizens at $5 billion.

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Ban calls grow louder

Russian authorities have for years criticised cryptocurrencies over fears they can be used for illegal activities and have called for regulation.

The move, if adopted, could disrupt the burgeoning virtual money sector as Russia is one of the largest crypto-mining nations in the world.

Authorities granted cryptocurrencies legal status in 2020, but their use in payments was never authorised.

Bloomberg earlier cited sources as saying that Russia's domestic security agency, the FSB, had lobbied central bank head Elvira Nabiulina for a ban.

The FSB cited concerns over Russians frequently using the hard-to-trace transactions to support "undesirable organisations", such as opposition groups.

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Source: TRTWorld and agencies