Taking a glance into Russia and crypto this week, we see that while the government wants to track more crypto transactions, one Russian court is actually pretty BTC-friendly.
You Can Run But You Can’t Hide
Russia’s Federal Service for Financial Monitoring (Rosfinmonitoring) is looking to keep a closer eye on all cryptocurrency transactions within the country. Consequently, Russian crypto users are expected to brace up for increased monitoring from regulators.
The financial intelligence agency has made significant progress on its plan to create a module for monitoring and tracking crypto transactions. And according to local news sources
, Rosfinmonitoring has already even chosen a contractor for the job
to "work on the creation of a module for monitoring and analyzing cryptocurrency transactions using bitcoin."
Although several contractors reportedly submitted their bid for the job, RCO — a major information technology company in Russia backed by the country’s largest bank — won the contract and will be charging the financial watchdog approximately $200,000 (14.7 million rubles) for the job.
Unlike China, Russia’s latest attempt to monitor the crypto industry does not appear to be geared towards stifling the growth
of the sector. The monitoring tool is reportedly being developed to proactively combat the use of cryptocurrencies for illicit activities.
That being said, the module will track the movement of cryptocurrencies, profile cryptocurrency users by identifying and monitoring their behavior, maintain a database of crypto wallets with links to illicit activity, and assess the likelihood of a user indulging in illicit transactions.
According to Rosfinmonitoring, the decision was necessary to "increase the level of law-abiding financial institutions," since cryptocurrencies are growing to become a popular choice for money laundering
and terrorist financing. Bitcoin, Ethereum and Monero had already been named as the most used cryptos for criminal activities by the agency.
Meanwhile, the push to keep tabs on cryptocurrency transactions in Russia has been around since 2020. In August 2020, the agency recommended the use of artificial intelligence to analyze blockchain transactions, with a prototype being deployed in the area of drug trafficking.
The head of Rosfinmonitoring, arguing in favor of the move, told Russian President Vladimir Putin that:
“Transparent blockchain" will allow the agency "to see all movements with cryptocurrency, that is, attempts to hide behind cryptocurrency [...] We have developed a digital service that allows us to analyze crypto transactions. This will enable us to track these transactions in cryptocurrency, and most importantly, we are now working out the signs and criteria that, in the general flow of transactions, could show us where there is a crime, there are already criminal cases.
Although the agency claims that its main agenda is to track crypto wallets related to criminal activities, it is still unclear how far the government is willing to go and how restrictive the move could become. For one, some experts familiar with the matter claim that the system being developed will allow officials to track transactions without crypto exchanges.
Maria Stankevich, Development Director of the EXMO crypto exchange, explained:
Knowing the IP address, it is not difficult to find out personal data: Internet providers are obliged to keep this information even after the termination of the contract. By the activity of the wallet, you can determine the time zone of the owner.
Meanwhile, it’s important to note that even without tracking tools, crypto transactions are not as anonymous as they claim to be. Since 2013, law enforcement has been clamping down
on malicious actors that use cryptos as a cover.
Customers First: Sberbank Unlocks Blocked Bitcoin Trading Account
In a rather interesting turn of events, a local court has ordered Russia’s largest bank, Sberbank, to unblock the account of a user linked with Bitcoin
According to an official statement
on Monday, the Sverdlovsk regional court stated that the banking giant had no reason to keep the account of a Bitcoin trader blocked after the individual provided details on his cryptocurrency activities.
Sberbank reportedly blocked the client from accessing his bank account on the grounds of suspicious transaction activity and anti-money laundering policies. The said client processed several transactions linked to crypto exchanges between May and August 2020. Despite providing detailed information on his Bitcoin trades, he was still denied access to his bank accounts.
The client proceeded to file a complaint at a city court and subsequently an appeal at the Sverdlovsk regional court. He accused the bank of breaching his consumer rights.
A positive precedent appears to have been set in the Russian crypto space as the court asserted that Sberbank had no reason to prevent the customer from accessing his account or limiting access to remote banking and card services after he “disclosed the economic meaning of the transactions and indicated the source of funds.”
The court, therefore, ruled that Sber must unblock the customer’s banking cards and re-enabling remote banking services. Furthermore, the bank has been ordered to reimburse the customer for his legal costs. On the flip side, the client has been denied access to moral damages, with the court stating that the plaintiff “did not use his bank accounts and cards for purposes that provide for the possibility of compensation for moral damage in connection with the violation of property rights.”
Sberbank is the largest financial institution in Russia— and the state-owned bank has repeatedly voiced its disapproval for Bitcoin in the past. For instance, in June, the bank’s CEO Herman Gref argued
that cryptocurrencies like Bitcoin were the riskiest types of investments while hyping existing financial systems.
A banking deposit is certainly the most reliable investment instrument. 100% reliability but unfortunately not very high profitability.
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