Russia’s Crypto Landscape Under a Microscope: Banks To Report Cross-Border Crypto Transfers

Key Takeaways

• Russia’s financial watchdog is turning its attention to the country’s crypto market.
• The Russian central bank has launched a financial market survey program, requiring major national banks to report on everything related to digital assets.
• Experts doubt the survey could paint a definitive picture of the crypto market, given that many transactions happen on P2P markets.

Russia’s central bank is taking a closer look at the country’s growing cryptocurrency market.

As the industry gains traction, the bank is launching a financial market survey program, requiring major national banks to report everything related to digital assets, including transfers, acquisitions, and more.

The move is part of the bank’s broader effort to understand the risks and opportunities presented by the crypto industry.

Central Bank of Russia Puts Crypto Under a Microscope

Nineteen of Russia’s leading banks, including MTS Bank, Raiffeisenbank, Citibank, Bank Soyuz, and UniCredit Bank, have been enlisted to participate in the financial survey.

Under the Central Bank of Russia’s instructions, these banks will submit detailed reports on cross-border crypto transactions conducted between Q4 of 2024 and Q1 of 2025.

The data collected will be used to track capital flows, prevent illicit activities, and inform the development of robust regulations to govern the industry.

According to state media reports, the survey will gather critical information. Here’s a quick rundown of the data points that banks will collect:

• The transfer method. 
• The name of the payment system.
• The parties to the transfer. 
• The country code of their banks.

The initiative is part of a broader effort to monitor and regulate the financial sector. It is seen as a crucial step towards establishing a more transparent and stable crypto market in Russia.

According to reports, the new financial reporting requirements are intended to monitor capital flow in and out of the country, prevent illicit trades, and develop comprehensive regulations based on the survey’s data points.

As part of the survey, any banking transactions linked to crypto exchanges will be deemed a crypto transfer. However, market pundits have questioned the viability of such a method and whether it is robust enough to paint a complete picture.

Is Financial Survey a Robust Method?

Market pundits believe the financial survey method introduced by the central bank won’t be feasible for tracking all crypto transactions.

Dmitry Kirillov, a teacher at the Moscow Digital School educational platform, told local media source RBC that the data points collected by the central bank will only offer an approximate figure, not an accurate one.

Kirillov explained that not all crypto transactions are carried out via centralized exchanges, as traders often use peer-to-peer platforms to transfer crypto. Tracking those transactions is nearly impossible unless brought under the purview of law.

For example, the Indian government has imposed a 1% tax deduction at source (TDS) on P2P transactions in India. Thus, all regulated entities offering P2P services must deduct 1% TDS on all P2P transactions, making it easier for the government to track such trades.

Russian central banks can only track P2P accounts through foreign accounts. Under Russian law, foreign account holders are required to report such accounts to authorities, which may allow the Russian central bank to compare P2P write-offs with deposits.