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Moscow is preparing to regulate Russian cryptocurrency exchanges, likely aiming to align its regulations with the standards set by the Financial Action Task Force (FATF).
In an interview with RBC, Dmitry Kirillov, an instructor at the Moscow Digital School, stated that this move represents the next logical progression for the government.
He pointed out that Moscow has already initiated regulations concerning crypto mining and the utilization of cryptocurrency for cross-border payments. “Now it is the turn of Russian crypto exchanges,” Kirillov elaborated.
Upcoming Regulations for Russian Crypto Exchanges
Kirillov mentioned that the current legislation still has gaps regarding peer-to-peer cryptocurrency transfers and exchanges.
The Russian Ministry of Finance is contemplating permitting qualified investors to trade digital currencies on licensed exchanges.#Russia #Cryptohttps://t.co/IaMCBSPTJZ
— Cryptonews.com (@cryptonews) July 15, 2024
This commentary followed Rosfinmonitoring’s announcement, the state agency responsible for anti-money laundering, regarding its intention to develop “a package of bills” aimed at “licensing” cryptocurrency exchanges in Russia.
If Rosfinmonitoring’s proposals are enacted, all cryptocurrency trading platforms in Russia will be required to seek operating permits from a central authority.
The agency also intends to mandate that exchanges “gather information about” the owners of cryptocurrency wallets utilizing their services. Additionally, platforms will be required to “retain data on all transactions for a minimum of five years.”
According to these proposals, platforms will be obligated to provide such information to “government entities, primarily law enforcement agencies.”
Numerous cryptocurrency exchanges function in major Russian cities; however, many have been associated with money laundering and fraudulent activities.
A meeting at the headquarters of Rosfinmonitoring, the Russian state anti-money laundering body. (Source: Rosfinmonitoring/Facebook)
Central Bank Policy Shift?
The Central Bank had previously advocated for a ban on all cryptocurrency exchanges. It now appears poised to acknowledge the necessity of altering its stance on this issue.
Rather, the bank seems to have recognized that cryptocurrency exchanges are an unavoidable aspect of the financial landscape and should be subject to regulation rather than prohibition.
Rosfinmonitoring has repeatedly urged the government to enhance its cryptocurrency regulations.
Most notably, this occurred earlier this year when the FATF downgraded Russia’s compliance ratings, specifically referencing its (then) largely unregulated cryptocurrency sector.
The Russian Central Bank. (Source: Ludvig14[CC BY-SA 4.0])
Moscow’s Goal for FATF Compliance?
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Yuri Brisov, a legal expert in digital matters, informed RBC that the agency’s proposals seem to align with several of the FATF’s principal recommendations.
He reiterated that the agency’s proposals appear to comply with many of the FATF’s key recommendations.
Brisov emphasized that licensing cryptocurrency exchanges would be “in accordance with FATF Recommendation 15,” which addresses the necessity to register and license “virtual asset service providers (VASPs).”
The requirement for transaction data collection “also adheres to FATF standards,” the expert noted.
Furthermore, he stated that the “requirement to provide information to law enforcement agencies” aligns with the so-called Travel Rule.
This rule also mandates that cryptocurrency exchanges share transaction data with one another.
Brisov concluded that achieving full compliance with the Travel Rule remains “still” a technically challenging endeavor for most nations.
Putin will surround himself with Russia’s biggest gathering of world leaders since his invasion of Ukraine, challenging efforts from the US and Europe to isolate him https://t.co/5kGfbvfNOZ
— Bloomberg (@business) October 22, 2024
Alignment with Global Trends: Legal Expert
Kristina Mkrtchyan, an advisor in the intellectual property practice at the law firm EBR, concurred that Rosfinmonitoring’s actions were “in alignment with the broader global trend towards enhancing oversight of cryptocurrency transactions.”
Mkrtchyan indicated that this is part of a larger initiative to “combat money laundering and terrorist financing.”
She added that “enhancing oversight” of cryptocurrency exchanges would “increase transparency within the industry.”
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— Reuters (@Reuters) October 21, 2024
However, she acknowledged that it may “also result in the exit of some participants from the market.”
The Central Bank has yet to express its views on this issue. Its official position in recent months has been that only entities within its designated cross-border cryptocurrency trade sandbox are permitted to provide cryptocurrency exchange services.
Nonetheless, the bank has not yet disclosed which companies it intends to permit into the sandbox.
Several prominent Russian banks have indicated their interest in offering cryptocurrency exchange services.
Additionally, discussions regarding the establishment of state-operated cryptocurrency exchanges – potentially at the Moscow and Saint Petersburg stock and currency exchanges – have diminished in recent weeks.
The post Russian Crypto Exchange Regulations ‘Will Be FATF-Compliant’ appeared first on Cryptonews.
