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Russia’s financial monitoring agency wants to improve its systems and identify transactions and blockchains that are currently hidden
Russia’s financial watchdog Rosfinmonitoring said on Friday it uses software to monitor cryptocurrency transactions and hopes to improve its capabilities as Moscow moves to regulate what one lawmaker called “cryptomania.”
Russia’s central bank has long expressed skepticism about cryptocurrencies, citing concerns about financial stability, advocating a complete ban on trading and mining, at odds with the government’s desire to regulate the industry.
Russia has already identified specific criminal cases involving cryptocurrencies, Rosfinmonitoring chief Yuriy Chikhanchin said, adding that the agency wants to improve its systems and identify transactions and blockchains that are currently hidden.
Chikhanchin said it’s currently not possible to cover everything, in part because not all countries are so eager to regulate the industry.
“It’s very difficult when cryptocurrency accounts go into an unregulated zone and we don’t understand who’s on the other end,” he said. “But I think we can solve this task yet.
The blockchain technology on which cryptocurrencies are based records transactions, but not the identity of wallet owners, making them difficult to trace.
Anatoly Aksakov, head of the finance committee in the lower house of the Russian parliament, said on Thursday that a bill to regulate cryptocurrencies will be submitted to the lower house in the fall.
“Of course there will be strict regulation,” Aksakov said, likening “cryptomania” to addiction in the gambling sector, which is heavily regulated in Russia.
“The same needs to be done with crypto exchanges and trading,” he said. “This phenomenon exists and cannot be ignored.”
The crypto industry has been in the crosshairs of regulators, who fear that the recent volatile market meltdown could affect the broader financial sector.
The slump – triggered by the crash of two major tokens in May – led to crypto lender Celsius suspending withdrawals and Singaporean crypto hedge fund Three Arrows Capital entering liquidation.
Russia’s central bank has said it is open to allowing the use of cryptocurrencies for international settlement and has approved more digital asset transactions.
Aksakov also expects a law on cryptocurrency mining to be considered soon, an area the government hopes to tax.
Unlike payments companies, most crypto exchanges initially rejected calls to cut off all Russian users, raising concerns among US lawmakers that the digital asset could be used to circumvent Western sanctions against Moscow over its actions in Ukraine.
Major exchanges have said they will comply with the sanctions by blocking sanctioned users. In April, Binance froze deposits and trading for Russian users with crypto assets exceeding 10,000 euros.