Russia to improve crypto trade monitoring as ruling draws closer

MOSCOW: Russia's financial monitoring agency, Rosfinmonitoring, said on Friday it was using software to track cryptocurrency transactions and hopes to improve its capabilities, as Moscow ushers in regulation on what one lawmaker dubbed "cryptomania".

The Bank of Russia has long voiced scepticism over cryptocurrencies, citing financial stability concerns, and has advocated for a complete ban on trading and mining, at odds with a government keen to regulate the industry.

Russia has already identified specific criminal cases involved in cryptocurrencies, said Rosfinmonitoring's head Yuri Chikhanchin.

Chikhanchin said it was not currently possible to cover everything, partly because not all countries are so eager to regulate the industry.

"It is very difficult when cryptocurrency accounts go into the unregulated zone and we don't understand who is on the other end," he said. "But I think we will still solve this task."

The blockchain technology on which cryptocurrencies are based records transactions, but not the identity of wallet-owners, making them difficult to track. Anatoly Aksakov, head of the financial committee in Russia's lower house of parliament, on Thursday said draft legislation on regulating cryptocurrencies would be put to the house in the autumn.

"Obviously there will be strict regulation," Aksakov said, comparing "cryptomania" to addiction in the gambling sector, which is tightly regulated in Russia. "The same needs to be done with crypto exchanges and trading," he said. "The phenomenon exists and it cannot be ignored."

The crypto industry has been in the crosshairs of regulators, who worry that a recent meltdown in the volatile market could hit the broader financial sector, Reuters reported.

The slump - sparked by the downfall of two major tokens in May - has led to crypto lender Celsius pausing withdrawals and Singapore-based crypto hedge fund Three Arrows Capital entering into

liquidation.