(Bloomberg) -- Russians own more than 16.5 trillion rubles ($214 billion) worth of cryptocurrencies, according to an estimate the Kremlin and government officials are using to craft a plan to regulate the industry.  

That figure -- equivalent to about 12% of the total value of global holdings, or a third of the market capitalization of Russia’s benchmark stock index -- helps explain why the government sees more value in regulating the sector than imposing an outright ban. The estimate was calculated last month by analyzing the IP addresses of the biggest crypto-exchange users as well as other information, according to two people working on the proposals with the government and the Kremlin who asked not to be identified because they aren’t finalized. 

To be sure, there’s a wide range of estimates for how much crypto Russians hold due to the decentralized nature of the investments. The head of the lower house of parliament’s financial markets committee Anatoly Aksakov in December cited data that Russians owned cryptocurrencies worth about 5 trillion rubles, according to the Tass news service.

The statistics offer a snapshot of the burgeoning cryptocurrency market in the world’s third-biggest bitcoin miner as officials at the central bank push for a sweeping ban on the local industry, while the government pursues a softer approach. 

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More than 17 million Russians, or about 12% of the total population, are cryptocurrency owners, according to data from the Singapore-based tripleA payment gateway. Sixty percent of local crypto investors are aged between 25 and 44, while more than 500,000 local computer programmers work in the industry, according to the people involved in the discussions. 

A representative of Deputy Prime Minister Dmitry Chernyshenko, who oversees the digital economy, declined to estimate Russians’ total holdings when contacted by Bloomberg. 

The 16.5 trillion ruble estimate could actually be on the low side because some traders conceal their activities using virtual private networks, the people said. After its recent slump, the global cryptocurrency market is currently worth about $1.75 trillion dollars, according to CoinMarketCap.

“The Russian crypto scene is growing and there are more and more investors coming in,” said Stanislav Koritsky, host of the investBRO podcast and a crypto investor since 2017. “Many of them are young people who don’t understand the market and jumped in amid all the hype.”

Ban or Regulate? 

With the government and the Bank of Russia at odds on the future of cryptocurrencies in Russia, President Vladimir Putin has called on authorities to find a regulatory compromise. 

The central bank -- which puts the annual value of crypto trading in Russia at $5 billion -- wants mining and trading shut down, saying it poses a threat to Russia’s entire financial system. 

The government, meanwhile, is mulling a raft of rules that include limiting trading to Russian banks, simplifying the process of blocking foreign crypto-exchange sites, and giving non-residents access to legitimate local exchanges, according to state-owned newspaper Rossiyskaya Gazeta.  

While Russia’s security services were said to be pushing the central bank for a total ban of cryptocurrencies on the grounds that they could be used to fund opposition parties, they have since switched to supporting the regulatory approach proposed by the government, the people said.  

©2022 Bloomberg L.P.