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Equating crypto with monetary instruments 'will bring nothing but harm' – Kremlin

Kitco News

(Kitco News) There is no reason for a country to recognize crypto as legal tender, according to Kremlin spokesman Dmitry Peskov, who added that Russia is not ready for such a step.

"It is certain that Russia is not ready for such steps. So far, there is not the slightest reason to [recognize cryptocurrencies]," Peskov told reporters this week.

Peskov warned that recognizing crypto as an official currency would only hurt the economy. "De facto, equating [cryptocurrencies] with monetary instruments will bring nothing but harm to the financial and economic system, if we are talking about full recognition as a means of payment," he said.

The comments came as El Salvador became the first country to adopt bitcoin as legal tender. Tuesday's historic move, however, triggered an unexpected selloff, with bitcoin falling $10,000 in less than 24 hours. 

Prominent gold bull and chief market strategist of Euro Pacific Asset Management Peter Schiff, was one of El Salvador's critics, tweeting Tuesday: "Your national 'currency' just lost over 15% of its purchasing power in under an hour. Get use to it."

The move to recognize crypto as legal tender will not end with El Salvador. In August, the government of Cuba said that the country's central bank would set rules in place to recognize and regulate cryptocurrency payments

When it comes to Russia, the country's central bank Governor Elvira Nabiullina advised against investing in cryptocurrencies. Russia has also introduced regulations that ban public officials from owning crypto.

Back in June, Nabiullina said that cryptocurrencies are "great risk for money laundering" due to the fact they the crypto world is anonymous and non-transparent. "There are aspects related to transparency. That's why we banned our financial institutions to work with cryptocurrencies."

However, bitcoin is growing in popularity in Russia. The latest survey conducted by the Russian Association of Currency Brokers (AFD) shows that nearly 77% of the Russian investors polled identified bitcoin and other cryptocurrencies as the "most forward-looking" investment. The AFD surveyed 502 investors between August 4 and 24.

In the spring, the People’s Bank of China (PBOC) issued a stark warning about Bitcoin. According to the PBOC’s official WeChat account, cryptocurrencies should not be used in financial markets or the real economy because they are not “real” currencies.

In June China did announce a new e-RMB, a digital yuan that is backed by the government and is stored in a digital wallet instead of a bank account. One of the reasons for this new digital currency push could be a chance for the government to oversee the mobile app purchases, which account for about 16% of China’s GDP, Bloomberg reported. Chinese government also does not want monopolization of digital currencies by tech giants.

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