The Head of the Central Bank of Russia is Against the Legalization of Cryptocurrencies

During a meeting of President Vladimir Putin with business representatives, one of the participants suggested legalizing cryptocurrencies in the Russian Federation. However, Elvira Nabiullina, the head of the Central Bank of Russia, objected the proposal, says Alexander Kalinin, the head of “Opora of Russia” – a public organization of small and medium businesses.

According to Kalinin, during the meeting on Thursday, September 21, the participants raised the subject of the general situation in the banking sector, and the head of the Central Bank said that bank members were aware of the risks. They have also discussed sanctions among other issues.

"At one point, one of the entrepreneurs proposed to legalize the cryptocurrency. Nabiullina said that the Central Bank was against this," he added.

Several countries around the world have opened their markets for cryptocurrencies. However, the Russian authorities are cautious regarding this issue while no regulation of cryptocurrencies has been introduced yet. First Deputy Prime Minister Igor Shuvalov said in August that a “crypto-ruble” should exist and the government will work carefully in this direction. Minister of Finance Anton Siluanov said in September that the ministry wanted to organize the cryptocurrencies and get them out of the “black market.”  He also declared that individuals should trade cryptocoins in analogy with OFZ, a type of bond issued by the Russian Minister of Finance. 

The Central Bank, on the other side, announced the premature admission of cryptocurrencies to trading in the Russian Federation and has warned citizens and market participants of the high risks. In early September, the head of the Bank of Russia said that the regulator would not allow the use of cryptocoins in the country as money surrogates. In the mid-September, Nabiullina spoke even harder, saying that the Central Bank is not only against accounting in cryptocoins, but also against equating those to foreign currencies, noting signs of a "financial pyramid."

Nabiullina motivates her position saying that if Russia legalizes the cryptocoins, the Central Bank will lose real levers of control over the financial flows coming from abroad and going to foreign bank accounts.