Annual crypto transaction volume by Russians was estimated at around $5 billion.
With the growing capitalization of the crypto economy, Russians have been making crypto transactions worth billions of dollars a year, information assembled by the Central Bank of Russia shows. Russian residents are among the most active participants in the crypto market, the regulator has recognized.
Russians Among Most Active Crypto Users, Central Bank Says
Consistent with its hardline position on decentralized digital currencies, the Central Bank of Russia (CBR) recently stated that cryptocurrency activities "carry significant risks for financial stability and investors, as well as climate risks." The warning was given in its Financial Stability Overview for the second and third quarters of 2021.
The monetary authority recognized the fast growth in the capitalization of the digital currency market that year. As per its analysis, cited by Forklog, increased investor interest in technologies such as blockchain, smart contracts, decentralized finance, and stablecoins played a significant role in rising crypto prices.
Referring to different analytical studies, the financial regulator admitted that residents of the Russian Federation were among the most active participants in the crypto space. Russians were also among the most regular users of cryptocurrency platforms. Russia was one of the leading countries in terms of visits on Binance, the world's leading crypto exchange.
The Central Bank of Russia said Russian residents were active crypto users and raised concerns about market risks.
Referring to estimates by large financial organizations surveyed that previous July, the Bank of Russia noted that the yearly volume of digital currency transactions made by Russians added up to around $5 billion. However, the CBR also commented that the anonymous nature of cryptocurrencies adds to their use in illegal activities, such as money laundering and terrorist financing.
The central bank, which consistently opposed recognizing cryptocurrency as legal tender in the Russian Federation, highlighted other related risks as well, including the conversion of fiat savings into crypto assets. The CBR considers cryptocurrencies unreliable as a store of value because of their price volatility.
The regulator is also concerned about the energy-intensive nature of Bitcoin mining. Rich in energy resources, Russia is an attractive target for miners, and some of its regions where power rates are very low have been calling for regulation of the business. A growing number of officials in Moscow now feel that mining should be legalized as a business activity and taxed accordingly.
Bank of Russia highlighted that overall the connection between the digital currency space and the traditional financial sector remains limited. At the same time, the authority believes that the spread of cryptocurrencies creates more risks for Russia's financial market and demands better monitoring.