- The Bank of Russia has proposed a full ban on cryptocurrencies.
- A handful of other countries have taken such a step.
- Dozens more have implicit bans in place.
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The Bank of Russia on Thursday issued a report calling for a total ban on cryptocurrencies.
While Russia banned cryptocurrency payments in 2020 and the central bank last month floated a ban on cryptocurrency investments within the country, today's proposal would go further.
Citing environmental concerns, it would immediately halt Bitcoin mining in the country, which provides over 10% of the computing power to the Bitcoin network. It would also prohibit financial institutions from handling any transfers of the digital assets. Not only would Russians not be able to buy goods and services in Bitcoin, they wouldn't be able to buy Bitcoin.
It's hard to imagine a cryptocurrency ban being enacted without the support of President Vladamir Putin, who has been in office for 18 of the last 22 years (he spent four years as prime minister due to term limits, which have since been amended)—and who has vacillated on his stance toward crypto as he works out the geopolitical ramifications. Moreover, many crypto proponents see Bitcoin and decentralized networks as almost immune to bans; it's difficult to police access and use of assets that are essentially open-source computer programs.
But other countries have already banned cryptocurrency, either explicitly or implicitly.
According to a November 2021 Law Library of Congress report, nine countries have explicitly banned cryptocurrency: Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar, Tunisia and, of course, China.
With the exception of China and Nepal, all of these countries have large Muslim majorities. There's an open debate whether Bitcoin is permitted under Islamic law, which forbids the charging of interest or other financial practices deemed exploitative. While a number of prominent clerics have declared Bitcoin to be "halal," or acceptable, others—such as the Ulama Council in Indonesia—have ruled it "haram," or forbidden, because the currency does not take physical form.
But even with bans in place, not every country can completely enforce them. As of July 2021, according to the Cambridge Centre for Alternative Finance, the nine countries above control 0.19% of the Bitcoin mining hash rate, meaning they contribute roughly one-fifth of a percent of the network's total computing power. None of that, at least according to Cambridge's stats, comes from mainland China.
China, the world's most populous country, has its own reasons for prohibiting cryptocurrencies. In critics' eyes, the regime prioritizes financial surveillance as a means of maintaining control over its citizens, whereas decentralized technologies skew toward privacy and financial freedom. China is currently piloting a central bank digital currency, a virtual version of its yuan, in part to undercut ubiquitous financial services offered by private companies Ant Group and Tencent.
Beyond those states with explicit bans, an additional 42 (among them Indonesia) have implicitly banned cryptocurrencies, per the Law Library of Congress, although laws and regulations related to the nascent technology are constantly shifting. This can mean that their governments do not allow financial institutions to take on crypto companies or holders as clients or that they even prohibit cryptocurrency exchanges from operating, among other restrictions.
The list of countries includes Benin and Burkina Faso. Both fall under the Central Bank of West African States (BCEAO), which does not admit crypto within the economic zone. The same goes for Cameroon and Chad, which are members of the Economic and Monetary Community of Central Africa (CEMAC); CEMAC says that because digital assets aren't regulated within it, they are illegal. None of this stopped Chad and Burkina Faso from registering the fifth- and sixth-highest peer-to-peer trading volumes for BTC in Africa as of September 2021, according to Useful Tulips, though their numbers pale in comparison to daily volumes on, say, Binance.
There are also pockets of resistance to crypto throughout South America, despite its embrace in states such as Argentina, Colombia, and Venezuela—Bolivia and Ecuador both take skeptical views of digital currency.
Closer to Russia, a handful of former Soviet republics, namely, Georgia, Moldova, Tajikistan, and Turkmenistan have all implicitly banned crypto. Also on that list: Kazakhstan.
A June 2020 law said only cryptocurrencies backed by other assets (e.g., stablecoins) could operate in Kazakhstan, though it formally recognized Bitcoin as a commodity the following month and began leveraging its cheap energy prices to attract miners. But its electricity grid has struggled to accommodate an inflow of exiled Chinese Bitcoin miners, which made it the second-biggest mining country in the world last year. Rising power and fuel prices led to riots at the beginning of the month and an internet shutdown, which took down mining operations with it.
The Central Asian country provides an interesting use case for Putin, who is keen to retain his grip on power. But if he's looking for how crypto bans have played out elsewhere, he's got plenty of other world leaders he can ask.