The use of cryptocurrencies is on the rise in Russia, with the country’s financial watchdog, Rosfinmonitoring, reporting to President Putin that the turnover of crypto assets is growing. Yury Chikhanchin, Rosfinmonitoring’s director, revealed that the agency is keeping track of over 25,000 participants in crypto transactions and has also identified around a dozen financial organizations that provide assistance to them. Putin warned that wherever money or new financial instruments appear, swindlers do, and Chikhanchin admitted that the use of cryptocurrency is increasing in Russia in the absence of comprehensive regulation.
To prevent financial scams and frauds, Rosfinmonitoring has carried out about 120 crypto-related investigations and initiated over 60 criminal cases. According to the executive, this was possible thanks to the launch of Russia’s new Transparent Blockchain platform. The crypto analytics tool is currently undergoing tests at the Ministry of Internal Affairs, the Federal Security Service, and the Investigative Committee. Other CIS countries, such as Kazakhstan and Belarus, have also shown interest in acquiring the tool.
Rosfinmonitoring’s blockchain analytics system allows the agency to keep track of more than 20 different crypto assets. “A year ago, the service could only track bitcoin, but now, using this system, it is possible to monitor the movements of more than 20 different crypto assets,” said Chikhanchin. This new system is part of the agency’s efforts to combat financial crimes and its monitoring of suspicious financial transactions.
The agency’s efforts have resulted in the discovery of a number of illegal financial activities. In early April, the darknet market Hydra was taken down as part of cooperation with authorities and representatives of financial intelligence organizations of other nations. Rosfinmonitoring used Transparent Blockchain to shut down the website, and an alleged administrator, Russian citizen Dmitry Pavlov, was arrested later that month.
The cryptocurrency turnover in Russia is likely to continue to increase as regulation catches up with the growing popularity of digital assets in the country. Currently, the use of cryptocurrencies is largely unregulated in Russia, but there are moves to regulate the industry. In November 2021, Russia’s State Duma passed a bill that provides for the regulation of cryptocurrencies, including mining and trading. The law is expected to come into force in January 2022.
The new regulatory framework will require crypto exchanges to collect information about their customers and report suspicious transactions to the authorities, among other things. The law will also limit the amount of money individuals can invest in cryptocurrencies, which could limit the growth of the industry in the short term.
Despite the new regulations, the interest in cryptocurrencies is likely to continue to grow in Russia. A study by the University of Cambridge’s Centre for Alternative Finance found that Russia is the third-largest country in terms of cryptocurrency mining, after China and the United States. The study estimated that Russian miners accounted for 6-8% of the global bitcoin mining industry in 2020.
In conclusion, the use of cryptocurrencies is on the rise in Russia, and the turnover of crypto assets is growing. The absence of comprehensive regulation has led to an increase in suspicious financial transactions, and Rosfinmonitoring is taking steps to prevent financial scams and frauds by monitoring suspicious financial transactions. The new regulatory framework expected to come into force in January 2022 will provide a comprehensive framework for the regulation of cryptocurrencies in Russia, which will limit the amount of money individuals can invest in cryptocurrencies, and require crypto exchanges to collect information about their customers and report suspicious transactions to the authorities. Despite the new regulations, the interest in cryptocurrencies is likely to continue to grow, and Russia is expected to remain a significant player in the global cryptocurrency industry.