Rosfinmonitoring is preparing strict rules for the crypto market: full identification and Travel Rule
The Russian regulator, represented by Rosfinmonitoring, intends to drastically tighten control over the circulation of digital currencies. A new package of measures, announced by the agency's advisor Vlada Korchagina, aims to bring the crypto industry out of the shadows and align national legislation with the stringent standards of the FATF.
The key change is mandatory full client identification for all new market participants. This is not just about collecting passport data. Brokers, trust managers, and crypto exchanges wishing to legally operate with digital assets will be required to disclose information about beneficiaries and ultimate beneficial owners. This is a direct blow to anonymity, which has long been a hallmark of cryptocurrencies.
Reducing the burden and expanding control
To avoid paralyzing the operations of legal services, the regulator has provided a delegation mechanism. Crypto companies will be able to transfer identification functions to commercial banks and professional securities market participants. This will reduce the operational burden but, at the same time, integrate crypto exchanges into the traditional financial infrastructure with its total monitoring.
In parallel, the list of transactions subject to mandatory control is being expanded. Five new types of transactions related to cryptocurrency will be added. Currently, transactions with digital financial assets amounting to 1 million rubles or more are already subject to control. Banks and depositories will have the right to block suspicious transfers.
Travel Rule and "decriminalization" of the market
The most significant innovation is the introduction of the Travel Rule for crypto transactions. Now, every transfer must be accompanied by end-to-end information about the sender and recipient. Similar requirements are already in effect in the European Union and most FATF jurisdictions. This completely eliminates the possibility of anonymous transfers, even if they pass through multiple wallets.
According to Korchagina, the goal of these measures is to "decriminalize" the cryptocurrency market. However, in my opinion, this is more of an attempt to force the industry into the Procrustean bed of traditional financial oversight. The real effectiveness will depend on how quickly and efficiently the infrastructure begins to operate.
The innovations will only come into force after the adoption of the bill "On Digital Currency and Digital Rights," which has so far only passed its first reading. However, the trend is clear: Russia, fearing being placed on the FATF "grey list," is betting on total control rather than stimulating innovation.
My expert opinion: The Russian crypto market is entering an era of total surveillance. For bona fide participants, this means increased compliance costs, but also greater trust from traditional financial institutions. For those who counted on anonymity, the game is over. The only question is how effectively the regulator will be able to track transactions in decentralized networks, where full transparency is technically impossible to ensure.