Regulating cryptocurrency is not straightforward. In Russia, the government is currently exploring ways to bolster this booming industry. A new proposal by Andrey Khrapov may set the tone for the industry as a whole. He seeks to impose very strict KYC requirements for low-scale cryptocurrency transactions.
Tighter Requirements for Bitcoin in Russia
Cryptocurrencies are often mentioned in the same breath as illegal activity. The involvement of Bitcoin in crime cannot be ignored, despite it representing a tiny minority of transactions. To counter these problems, regulators want to introduce new guidelines as a way to identify users. According to Russia’s Main Directorate for Drug Trafficking, that rule should be enforced upon small cryptocurrency transaction amounts as well.
Andrey Khrapov has submitted a proposal to curb money laundering efforts involving Bitcoin. Any transaction worth 600,000 rubles (roughly $9,000) or more needs to be monitored by Russian authorities. This also includes registering these transfers and the individuals involved in the transaction. This proposal receives support from the Ministry of Finance. Other government officials are not on the same page regarding this suggested measure.
Additionally, this proposal serves another purpose. It is a measure to ensure all crypto transactions in Russia are conducted by licensed operators. These providers need to perform stringent KYC and AML verifications to prevent money laundering and terrorist financing from happening. Transactions under the threshold of 600,000 rubles remain unaffected by this proposal.
No Real Cause for Concern
Know-Your-Customer and Anti-Money Laundering procedures are nothing new in the cryptocurrency world. Virtually all Western exchanges verify user identities prior to letting them purchase or trade cryptocurrencies. Russia seems to have originally taken a slightly more lenient approach in this regard. It is unclear if there will be no KYC requirements at all for transactions below the proposed threshold.
Ensuring exchanges are licensed is another positive step. Similar to Japan, trading platforms will need to register with the Russian government. It brings more legitimacy to the cryptocurrency industry. That is, assuming this proposal is approved and implemented by the regulators. An official response to the amendment remains elusive at this time.
For the cryptocurrency industry, this proposal is a positive sign. It confirms Russia has no intention of banning cryptocurrency trading activity, at least for now. Regulatory uncertainty fuels speculation as to how countries lean toward preventing Bitcoin activity altogether. This latest development shows that banning is not in the interest of Russian regulators. Official Bitcoin guidelines are currently making their way through the Russian parliament.
What do you think about these proposed requirements in Russia? Let us know in the comments below.
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