The Central Bank of Russia and Rosfinmonitoring have jointly developed a platform for banks to identify the link between customer transactions involving traditional fiat currency and cryptocurrencies. This initiative was revealed at the forum “Actual Issues for/FT” organized by RFM, where Ilya Bushmelev, director of projects at Innotech, shared that several major banks are currently testing this platform in a pilot phase.
Bushmelev explained, “Our goal is to establish the correlation between fiat and crypto transactions. While financial institutions have established processes for dealing with fiat currency, cryptocurrency transactions are often treated separately. Tools such as the ‘transparent blockchain,’ developed by Rosfinmonitoring, are being utilized in this pilot project commissioned by the Bank of Russia and Rosfinmonitoring under the president’s directive.”
Five major banks are participating in the project, with testing scheduled to continue until the end of May 2024, with a possible extension based on the outcomes. The results of the pilot program are expected to provide insights into the necessary actions and tools required by banks in the realm of cryptocurrencies, specifically in terms of “Know your customer” and “Know your transaction” procedures, thus aiding in the formulation of more effective cryptocurrency regulations.
Alexander Kuryanov from Rosfinmonitoring emphasized that market participants are currently examining “communication scenarios linking a client’s fiat operations with their activities in the non-banking sector,” which could potentially lead to the development of methodological or regulatory recommendations.
By the end of the third quarter of 2023, Russians were found to hold 96.9 thousand bitcoins (equivalent to approximately 255 billion rubles) in cryptocurrency exchange wallets, with the total value of their cryptocurrency transactions in the second or third quarter of 2023 reaching around 700 thousand bitcoins (equivalent to 1.68 trillion rubles).
Despite the enactment of the law on digital financial assets in 2020, there remains ambiguity in Russian legislation regarding who can serve as providers of digital currencies, including cryptocurrencies. The use of digital currencies as a medium of exchange by residents is currently prohibited. This lack of clear regulations surrounding cryptocurrencies has impacted Russia’s standing in the FATF (Financial Action Task Force) ratings. In February 2024, Russia experienced a downgrade in one of its ratings related to monitoring operations involving virtual assets and cryptocurrencies due to inadequate regulatory measures.