Russia to Keep Tabs on Bitcoin Transactions, Wallets

Rosfinmonitoring wants to keep a close eye on people’s transactions with cryptocurrencies and their crypto wallets.

The Russian authorities are planning to start keeping track on cryptocurrency transactions, in particular those with Bitcoin and the crypto wallets of its citizens.

The Russian service of the BBC refers to an entry in the public procurements platform in which the country’s federal agency for financial monitoring, Rosfinmonitoring, launched a public bidding procedure for the creation of an analytical instrument for tracking operations with cryptocurrencies (Bitcoin in particular) and e-wallets. The new functions are to be included in the package of analytical programs for the tracking of financial transactions and prevention of financial crimes and financing of terrorism.

The new product is expected be ready by the end of 2018. It should be able to track the transactions of a person by adding his bank account number, bank card or phone number and link them to their e-wallet and cryptocurrency transactions. The BBC states that the contract was awarded to SPI – a Moscow-based developer of the analytical program iRule, which is used by the law enforcement agencies, credit organizations and insurance companies in Russia.

Both Rosfinmonitoring and SBI refused to comment to the BBC, saying that the project is classified information.

The government agency has been critical of cryptocurrencies for several years, saying that using them can be a good reason to void a deal. At the same time, the draft bill on digital financial assets, which passed its preliminary reading in Russia’s Duma (the lower chamber of parliament), says that transactions with cryptocurrencies can be made only by legal entities.

Russian crypto experts, however, said that the attempts by Rosfinmonitoring to keep tabs on crypto transactions might have the contrary effect – instead of continuing to provide transaction statistics, the blockchain platforms might become completely opaque.

“If you look at the entire turnover of money laundering, the share of cryptocurrencies is very small,“ Anton Merkurov, an internet expert and editor-in-chief of the site Satoshi.fm told BBC. “If you look at the P2P platform LocalBitcoins, its weekly turnover is one billion rubles ($14.7 million), which is not that much. Instead of looking for the large fish, the authorities are using a microscope to look for microbes in a drop of water. This should not be the priority. And more importantly, there will be an active counteraction and the criminals will come up with more efficient ways for money laundering,” Merkurov added, noting that the bad guys can easily set up a new crypto wallet for each operation.