Russia tests innovative method for tracking connections between cryptocurrency and traditional currency
Russia’s central bank and Rosfinmonitoring are collaborating on a new system designed to identify connections between cryptocurrency transactions and fiat operations. The aim of this platform is to assess the size of the local cryptocurrency market. The project is currently in the pilot testing phase, with five undisclosed lenders participating. The pilot, which is scheduled to conclude at the end of May, may be extended depending on the results. The objective is to gain insights into the necessary actions and tools for financial institutions to comply with cryptocurrency regulations, including procedures such as “know-your-crypto-client” and “know-your-crypto-transaction.” It is currently unclear whether the pilot has yielded positive outcomes. This initiative demonstrates Russia’s ongoing efforts to navigate the complexities of the cryptocurrency landscape. In 2023, a Russian bank began monitoring its customers’ cryptocurrency activities as part of the government’s push to establish regulatory frameworks for state corporations’ involvement in the sector. However, there have been no public announcements regarding the results of that pilot. Meanwhile, authorities in the US and UK are investigating cryptocurrency transactions for potential links to Russia, suggesting that over $20 billion may have passed through the sanctioned Russian crypto exchange, Garantex. It is uncertain whether Russia’s central bank and Rosfinmonitoring are specifically targeting transactions associated with Garantex or aiming to identify all cryptocurrency activity within the traditional finance sector.
