The Central Bank of the Russian Federation has announced plans to increase the time taken to process payments made to cryptocurrency exchanges. The objective of this decision is to stop Russian citizens from making Bitcoin purchases impulsively.
The Central Bank has also stated that it is negotiating the terms of this restriction with local banks to prevent people from making wrong decisions by to making hasty cryptocurrency purchases.
The First Deputy Governor of Russia, Sergey Shvetsov, recently gave a speech at an international banking forum. He stated that Russia was talking about the effects of cryptocurrencies on its economy. This has been the main concern for different countries.
Cryptocurrencies are Highly Risky
Shvetsov also stated that the government was concerned about the highly risky and volatile nature of cryptocurrencies. He noted that cryptocurrencies could end up like a pyramid scheme that would later collapse and cause investor harm.
Shvetsov also stated that cryptocurrencies were like a double-edged sword. While there was a possibility that the market could collapse, there was a chance that it could thrive. However, he noted that this uncertainty made the market even riskier.
To reduce the level of risk, the Central Bank will make the process of buying cryptocurrencies lengthy. It will also convince financial institutions to adopt this strategy. This will give investors time to evaluate their decision before making a purchase.
A week before this announcement, the Press Secretary to Russia’s President, Vladimir Putin, stated that there is very little possibility that Russia will recognize Bitcoin and other cryptocurrencies. He noted that the risky nature of cryptocurrencies made them a threat to the economy.
Crypto Ecosystem in Russia
Russia has for the longest time been conservative about cryptocurrencies. In July last year, President Putin signed a new law that removed previous bans and made cryptocurrencies acceptable in the country. However, this law does not allow people or businesses to use cryptocurrencies as a means of payment.
The country also has a cryptocurrency monitoring system that oversees crypto transactions and identifies any illegal dealings made with cryptocurrencies.
Despite these restrictions, Russia has one of the largest cryptocurrency communities in Eastern Europe. A recent Chainalysis report stated that Russia takes the lead when it comes to cryptocurrency adoption.
Besides rising adoption in Eastern Europe, the same is also rising in other developing markets such as Africa. Chainalysis stated that Africa currently carries the largest share of the cryptocurrency retail market.
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Author: Ali Raza