Crypto news

The State Duma Committee on the Financial Market has presented an updated version of the bill "On Digital Currency and Digital Rights" for the second reading. The key change is a new mechanism for blocking transfers related to the illegal circulation of cryptocurrencies, which significantly expands the powers of banks.

The original version of the document provided for the maintenance of two registers by an authorized body. The first would include legal entities, individual entrepreneurs, and foreigners organizing the circulation of cryptocurrency outside the legal framework. The second would include foreign payment providers servicing transfers in favor of individuals listed in the first register. However, both lists were excluded for the second reading.

Instead, the concept of an "unauthorized recipient" is introduced. This is a recipient of funds regarding whom the bank has suspicions that they are organizing the circulation of digital currencies without the appropriate status of a legal market participant in Russia. Notably, the bill does not establish specific criteria for suspicion and does not assign their development to the Bank of Russia. Each financial institution will determine them independently in internal documents — this creates a risk of subjective interpretation.

Blocking and Exclusion Procedure

Banks are required to transmit information about "unauthorized recipients" to the Central Bank. In response, the regulator may only provide data on foreign payment service providers servicing transfers in their favor. Publication of this information is not required, leaving a significant part of the process in the shadows.

Payment agents, telecom operators, postal operators, and participants of the digital ruble platform were excluded from the mechanism for the second reading. The obligation to refuse transfers is placed on credit institutions, branches of foreign banks, and payment card issuers. The bank must immediately notify the client of the refusal in the manner prescribed in the contract, but the procedures for notifying the "unauthorized recipient" themselves and challenging the blocking are absent from the document.

Refusal of transfer does not apply in three cases: if the transaction is related to a foreign trade contract, if the transfer is carried out on behalf of an organization exchanging digital currency, or if the transaction is conducted on behalf of a broker or trustee subject to permission from the Bank of Russia.

The State Duma plans to consider the bill in the second reading on July 21. Earlier, First Deputy Chairman of the Central Bank Vladimir Chistyukhin indicated that the law on regulating the crypto market will come into force on September 1.

My analysis: This bill is another step towards tightening control over crypto circulation in Russia. The lack of clear criteria for suspicion and a procedure for challenging blockings creates grounds for arbitrariness on the part of banks. The market should prepare for an increase in the number of transfer refusals, which may push some users towards illegal channels. I believe that without a more transparent mechanism and protection of the rights of bona fide participants, regulation risks becoming a tool of excessive pressure rather than an effective fight against the shadow sector.