CBR to Restrict Crypto-Related Transactions to Prevent Financial Crime

The Central Bank of Russia is limiting ways for cryptocurrency investments including blocking payments to prevent financial instability.

The Central Bank of Russia (CBR) has criticized cryptocurrency for the past few years and may mandate the banking sector to halt transactions with certain Merchant Category Codes (MCC). This four-digit code permits the card issuer to categorize the transaction that clients can carry out using a particular credit card. Usually, digital asset service providers use MCC 6051 code, the Russian Forbes magazine reported. However, the restriction of crypto cards has become a trending topic for discussion as CBR is limiting the options for investing in cryptocurrencies.

“A large number of Russians own the cryptocurrency. At the same time, cryptocurrencies are volatile, unsupported, and opaque for regulators. However, now their ban can create problems for millions of compatriots since it will make illegal what they already own. In this regard, various options for regulation are currently being worked out. It is planned to develop a consolidated position on this issue in 2022,” the press service of the Ministry of Finance commented to Forbes.

CBR authorities are legislating new laws and policies to overcome risk of financial instability that is foreseen from a rapid spike in virtual currency transactions. The proposed laws, that are yet to be enlisted for decision in the upcoming parliamentary session, seek to restrict all the new purchases of digital assets in the country. However, the use of the underlying technology of cryptocurrency and its use may be allowed under certain exceptions.

Bank of Russia Wants to Restrict Crypto Investments by Blocking Card Payments, Report Reveals – Finance Bitcoin News

The Central Bank of Russia is currently reviewing various ways to prevent Russians from investing in cryptocurrency. One the options on the table is to block… pic.twitter.com/h3MaenClUC

— Crypto Invstr (@c_invstr) December 27, 2021

Central Bank of Russia’s first Deputy Governor Ksenia Yudaeva stated that as digital currencies are becoming popular, financial regulatory bodies are alarmed about the threats to the monetary system they come up with.

“Additional steps are needed to ensure that money surrogates are not used for payments. The situation in developed market countries more and more resembles the so-called shadow financial system,” Yudaeva wrote in an article.

The news was published as a working group established by the Russian State Duma held the first meeting to tackle the rising concern of digital currency regulation. Duma Speaker Vyacheslav Volodin instructed to develop a separate group to oversee participation of government bodies and the lower house of parliament. The aim is to address regulatory shortcomings for the crypto mining and taxation industry.

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