Shraddha Sharma
The Bank of Russia plans to monitor all cross-border cryptocurrency transactions over the next six months. The program will involve 19 major banks for detailed reporting on transfer methods, parties involved, and payment systems used.
Experts say that it will control illegal transfers and regulate capital flows. Russia has been escalating research on international crypto payments while reducing dependency on the USD.
Putin administration wants to know everything about crypto transfers
The Bank of Russia (CBR) aims to monitor cross-border cryptocurrency transactions made by its citizens over the next six months. A local report notes that 19 banks, including major institutions like Citibank, MTS Bank and Raiffeisenbank, will report on transfers related to buying or selling crypto to the central bank.
The CBR website lists financial market surveys for the next 6 months that will collect detailed information on the transfers. It will include information on the transferor, transferee, the method of transfer, payment systems used, and the amount translated from crypto units. Banks will also reportedly identify these transfers using specific codes. Kristina Mkrtchyan from Moscow Digital School (MDS) told RBC that the country wants to gather data to control illegal transfers and control capital flows. The information might also assist in policy framework but analysts question the accuracy of this data. Considering major amounts of transfers occur as peer-to-peer (P2P) transactions.
Moscow approved the use of crypto in international payments in July this year. The country took a U-turn from its skeptical crypto stance after tensions with the US escalated. The Putin government has since been exploring cross-border digital settlements. The aim is to circumvent sanctions from the West with regulated trials with exchanges. The administration also reportedly signed a mining bill to legalize the activity following November. Therefore, Q4 2024 is now a crucial quarter for the country as US Elections will conclude in the same period.
Russia has escalated CBDC development
Reports have been underlining that Putin wants to reduce dependency on the US dollar. However, this comes with surveillance of digital transfers done by its citizens. Meanwhile, Chainalysis ranks Russia among the top countries in crypto transaction volume and adoption. Reports also indicate that Russia could launch new digital currencies, including stablecoins based on the Chinese Yuan and currencies from the BRICS group of countries while developing 2 new crypto exchanges in St. Petersburg and Moscow.
The central bank is also developing the digital ruble CBDC since 2020. In 2022, it announced the CBDC prototype before officially launching it the following year. As per the Atlantic Council, Russia targets mass adoption by citizens for 2027. The administration proposes to start digital ruble acceptance in 2025.
Meanwhile, in the latest press release, the Bank of Russia clarified that introducing the digital ruble will not impact inflation. The apex bank notes that the digital ruble will change the structure of money from cash to digital while keeping the supply constant. The country has been battling inflation with the war against Ukraine putting strain on resources on the back of military spending. The central bank raised the key interest rate from 18% to 19% last month.
