Moscow to Regulate Crypto Exchanges: A Step Towards Compliance
Moscow is poised to implement regulations on Russian cryptocurrency exchanges, aiming to align with the standards set by the Financial Action Task Force (FATF). This move is viewed as a crucial next step by government officials and experts alike in ensuring a more secure crypto landscape within the country.
Current Regulatory Landscape
Dmitry Kirillov, an educator at the Moscow Digital School, emphasized that the regulation of crypto exchanges represents the natural progression for Russian authorities, following the earlier regulation of crypto mining and the use of digital currencies for cross-border transactions. He stated, “Now it is the turn of Russian crypto exchanges,” pointing to the government’s increasing focus on oversight.
Legislative Developments on the Horizon
The anticipation of new laws was fueled by recent announcements from Rosfinmonitoring, Russia’s state anti-money laundering agency, which is aiming to introduce a set of legislative measures to license crypto exchanges. According to Kirillov, there are still gaps in the current legislation, particularly concerning peer-to-peer crypto transfers.
Rosfinmonitoring’s proposed regulations would require all cryptocurrency trading platforms in Russia to seek operating permits from a central agency. Additionally, these platforms would be mandated to gather and retain information about crypto wallet holders using their services and keep records of all transactions for a minimum of five years. This data would be made accessible to government entities, particularly law enforcement agencies.
Concerns Over Fraud and Money Laundering
Many of the crypto exchanges currently operating in major Russian cities face scrutiny due to links with money laundering and fraud. The proposed regulations aim to address these concerns and enhance the integrity of the crypto marketplace.
Shift in Central Bank’s Stance
Historically, the Central Bank of Russia had pushed for a ban on all cryptocurrency exchanges. However, there appears to be a shift in this position, as the bank now acknowledges the necessity of regulation over a complete prohibition. This change comes in response to the FATF’s criticism earlier this year, which highlighted Russia’s largely unregulated crypto sector.
Aligning with FATF Standards
Legal expert Yuri Brisov noted that the proposed regulations align with FATF recommendations, especially regarding the registration and licensing of Virtual Asset Service Providers (VASPs). The requirement for exchanges to collect transaction data is consistent with FATF standards, as is the obligation to share information with law enforcement under the Travel Rule, which facilitates transaction transparency among exchanges.
Global Trends and Potential Market Shifts
Kristina Mkrtchyan, a legal advisor at EBR, pointed out that Rosfinmonitoring’s proposed measures reflect a global trend of increasing regulation over cryptocurrency transactions as part of broader efforts to combat money laundering and terrorist financing. While this movement aims to enhance industry transparency, it might also result in the exit of certain players from the Russian crypto market.
Future of Crypto Exchanges in Russia
The Central Bank of Russia has not yet clarified its position regarding these new regulations, maintaining that only entities within its cross-border crypto trading sandbox may engage in exchange services. Despite this, there is growing interest among top Russian banks to enter the crypto exchange market. Discussions surrounding the creation of state-run crypto exchanges at prominent financial centers in Moscow and Saint Petersburg have seemingly diminished in recent weeks.
The evolving landscape of cryptocurrency regulation in Russia signals a critical juncture, balancing the need for oversight with the desire to foster a vibrant digital economy.