The Russian Central Bank has reported a significant increase in citizens’ transactions on crypto exchanges and peer-to-peer platforms. The bank observed trends from the fourth quarter of Financial Year 2023 to the first quarter of FY2024, noting a 16.4% increase in web traffic of Russian users on major cryptocurrency platforms. The average monthly number of unique Russian IP address-holders on these platforms also increased by 15.1%. Transactions potentially attributable to Russians totaled over $50.2 billion, including crypto trades, P2P payments, remittances, and more. The report also highlighted a preference for higher-cap assets like Bitcoin and Ethereum, as well as USD-pegged stablecoins such as USDT and USDC.
The Russian Parliament has proposed a ban on the organization of cryptocurrency circulation in Russia starting from September 1, 2024, along with the prohibition of cryptocurrency advertising. Only miners and projects approved by the Central Bank will be permitted to operate. The Central Bank’s tool, Transparent Blockchain, developed by the Federal Financial Monitoring Service, helps identify the true identity of crypto users on various blockchain protocols. The bank’s warning to Russian crypto users emphasized the risks and dangers associated with holding crypto in Russia, especially amid rising tensions with the West. It highlighted the potential for loss of access to funds if blocked by stablecoin issuers.
The bank did not disclose the list of monitored crypto platforms, but previous reports included data from platforms like Binance, Bybit, and KuCoin. The spike in transactions may be linked to Binance’s exit from the Russian market since it had dominated a significant share of the nation’s crypto market. The Central Bank advised financial organizations in Russia not to offer financial instruments related to cryptoassets and to refrain from advertising services connected to cryptoasset circulation. It warned about the tightening control over transactions with stablecoins in the US and UK, with a potential increase in scrutiny on crypto exchanges by regulators in these countries.
In response to escalating tensions and sanctions from unfriendly countries, the Central Bank highlighted the risks associated with holding cryptoassets in Russia. It emphasized the potential consequences of being blocked by stablecoin issuers, which could lead to losses for Russian holders. The bank’s recommendations for Russian financial organizations indicated forthcoming regulations that may prohibit offering financial instruments tied to cryptoassets and advertising services related to the circulation of cryptoassets. With governments in unfriendly nations increasing control over user transactions, including within the framework of sanctions restrictions, Russian financial organizations were urged to exercise caution in their dealings involving cryptoassets.
Despite the warnings and risks associated with holding cryptoassets in Russia, the cryptocurrency market continues to attract significant interest from Russian citizens. The ban proposed by the Russian Parliament on cryptocurrency circulation and advertising signifies a shift in regulatory attitudes toward cryptoassets in the country. As tensions with the West persist and sanctions impact the financial landscape, Russian crypto users must navigate the challenges of accessing and utilizing cryptoassets in a rapidly changing regulatory environment. The Central Bank’s monitoring of citizens’ transactions on crypto platforms reflects the growing importance of regulatory oversight in ensuring financial stability and mitigating risks associated with the use of cryptoassets.
