Russia will improve its monitoring of cryptocurrencies as regulation approaches

MOSCOW, July 8 (Reuters) – Russia’s financial watchdog, Rosfinmonitoring, said on Friday it was using software to track cryptocurrency transactions and hoped to improve its capabilities, while Moscow began regulating what a lawmaker called “cryptocurrency.”

The Bank of Russia has long expressed skepticism about cryptocurrencies, citing concerns about financial stability, and has called for a complete ban on trade and mining, in violation of a government concerned with regulating industry.

Russia has already identified specific criminal cases involving cryptocurrencies, said Rosfinmonitoring chief Yuri Chikhanchin, adding that the agency wants to improve its systems and identify transactions and blockchains that are currently hidden.

Chikhanchin said that at the moment it was not possible to cover everything, partly because not all countries are so eager to regulate the industry.

“It is very difficult when cryptocurrency accounts enter the unregulated zone and we do not understand who is at the other end,” he said. – But I think we will still solve this task.

The blockchain technology on which cryptocurrencies are based records transactions, but not the identities of wallet owners, making them difficult to track.

Anatoly Aksakov, chair of Russia’s lower house finance committee, said on Thursday that a bill regulating currencies would be presented in the autumn.

“Obviously there will be strict regulation,” Aksakov said, comparing “cryptomania” to addiction in the gambling sector, which is strictly regulated in Russia.

“The same must be done with crypto exchanges and trading,” he said. “The phenomenon exists and it cannot be ignored.”

The crypto industry has been at the crossroads of regulators, who are concerned that a recent meltdown in the volatile market could hit the broader financial sector.

The decline – triggered by the fall of two major tokens in May – has led to cryptocurrency lender Celsius halting withdrawals and the Singapore-based crypto hedge fund Three Arrows Capital to go into liquidation. read more

Russia’s central bank has said it is open to allowing the use of cryptocurrencies for international settlement and has approved other transactions with digital assets.

Aksakov also expects that a law on the recovery of cryptocurrency will soon be considered, an area the government hopes to tax.

Unlike payment companies, most crypto exchanges initially rejected calls to cut all Russian users, raising concerns among U.S. lawmakers that digital assets could be used to evade Western sanctions against Moscow over its actions in Ukraine.

Major stock exchanges said they would comply with sanctions by blocking sanctioned users. In April, Binance froze deposits and trade for Russian users with cryptocurrencies of more than 10,000 euros.

Reporting by Reuters, editing by Louise Heavens

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