Opposition Funding Fears Behind Russia Crypto Ban Proposal

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  • The proposed crypto ban by Russia appears on the surface to be about protecting users and conserving energy
  • The ban would also conveniently benefit president Vladmir Putin, according to Fortune
  • Cryptocurrencies are increasingly being used to fund Putin’s opposition parties and media

Russia’s proposed ban on cryptocurrency usage and mining is due, according to numerous reports, to a number of factors ranging from threats to the country’s sovereign currency to high energy usage. However, the real reason may be more sinister according to Fortune, who say that the Russian government is trying to clamp down on cryptocurrencies because they are being used to fund political and media organizations opposed to Vladmir Putin.

Russia Crypto Ban “Protects Citizens”

Numerous media outlets reported gleefully on Russia’s announcement yesterday that it may ban cryptocurrency usage and mining, with the report from the Central Bank of Russia warning that cryptocurrencies resembled pyramid schemes, that they undermined the sovereignty of monetary policy, and that they were a threat to the country’s energy sector.

Russia is thought to be one of the biggest cryptocurrency mining hubs in the world, with the cold temperatures in Siberia and such regions tempting for miners, as well as the low energy costs.

Cryptocurrencies Used to Fund Putin Opposition

The real reason for a complete cryptocurrency ban may be more worrying however, according to two people “familiar with the matter” that Fortune spoke to who said that Russia’s security service, the FSB, backs the ban because cryptocurrencies are being used to fund the country’s political opposition:

The Federal Security Service, or FSB, lobbied Governor Elvira Nabiullina for a blanket ban as the hard-to-trace payments are increasingly used by Russians to donate to undesirable organizations, including media resources that have been labeled “foreign agents,” said the people, who asked not to be identified because the information is not public.

Despite opposition and media funding accounting for a small amount of the 7 trillion rubles ($92 billion) of assets held in about 17 million cryptocurrency wallets in Russia, the security services are worried that it is a growing problem.

Suddenly it’s clear why Satoshi Nakamoto was worried about the prospect of WikiLeaks accepting bitcoin back in 2010 – governments do not like anything that undermines their power.