Russia is scaling up its cryptocurrency regulatory framework with planned tracking of Bitcoin and other digital currencies.
The country’s financial monitoring agency, Rosfinmonitoring, has commissioned the creation of a system that aims to track and analyze the behaviour of crypto investors. The system will also potentially identify crypto users.
A subsidiary of the Sberbank is reportedly working on establishing the tracking service. Notably, Sberbank is the country’s leading banking and financial services firm.
According to the tender, the tracking service will offer more data on the value of digital currency wallets alongside providing information on tractions.
One of the tracking’s goals is to create a database of cryptocurrency wallets associated with illegal activities and terrorist financing.
Interestingly, the tracking of crypto users might pose a challenge considering the anonymous nature of cryptocurrencies. Although holders of cryptocurrencies like Bitcoin can be tracked, other highly privacy centered digital assets like Monero are near impossible to track.
Recently, most jurisdictions have been focusing on establishing a cryptocurrency regulatory framework, especially with the use of Bitcoin in facilitating ransomware.
Russia’s increasing crypto legislations
Furthermore, the proposition from Russia adds to the growing list of the country’s cryptocurrency legislations. Last year, President Vladimir Putin approved a new law enabling Russians to buy and sell cryptocurrencies. Under the law, businesses are prohibited from accepting cryptocurrencies as a form of payment.
Furthermore, the Central Bank of Russia (CBR) recently called on stock exchanges not to offer cryptocurrency-related products to investors.
According to the CBR, crypto products remain a risk due to high volatility, pricing issues, limited liquidity, lack of transparency, and unclear regulations.
“Managers should not include these assets in mutual funds, and brokers and trustees are advised to refrain from offering pseudo-derivatives with such underlying assets to unqualified investors,” CBR said.
The bank noted that digital currencies are not ideal for people without experience.