Strict KYC Rules for Bitcoin in Russia: Proposal Pending
With digital assets on the rise, governmental regulators worldwide are facing a complex and challenging task in attempt to apply a governed process to a decentralized movement. Russian government officials, including Andrey Khrapov, released a proposal to tackle the rapidly growing industry. They plan to implement rigid KYC regulations on low scale digital currency transactions.
Russia Proposes Strict Regulations for BTC
It is quite common for the topic of cryptocurrency to be associated or discusses side by side with issues of cyber hacking or other forms of illegal activity. Although a minute percentage of Bitcoin transactions are associated with the latter, it remains an issue to be aware of and strive to secure for the future. In an attempt to do so, officials and regulators aim to implement strict guidelines as a form of user identification. Based on the Main Directorate for Drug Trafficking in Russia, this rule will be applied to smaller digital currency payments. In an attempt to deter financial crimes such as money laundering associated with Bitcoin and digital assets, Khrapov created a proposal stating that transactions starting at a value of $9K USD is required to be under full monitorship by Russian officials. The proposal outlines that such transactions must be registered including user identification linked to the payments. The Russian Ministry of Finance has already provided their support for the implementation of this proposed solution however many other officials are not in full agreement.
In addition to deterring cyber crime, the proposal offers another purpose. It acts as a means to ensure any digital currency process taken place within the nation is only carried out by registered operators. Such licensed providers are required to abide by strict KYC laws as well as AML verification in the hopes of gaining control over national crimes such as laundering and terrorist funding. For transactions less than the value of $9K USD, these rules do not apply.
A Step Towards Legitimizing Russian Crypto Transactions
The notion of deterring and prohibiting cyber crimes such as laundering has always come hand in hand with the crypto industry. Essentially all Western-based cryptocurrency exchanges undergo a process of user verification much like those used for traditional banking systems in order to participate in the crypto community. On the other hand, Russia’s approach to digital assets was much more lenient than that of the West’s at first, which is part of the great initiative to get Russian transactions under control. As of now, it remains unconfirmed as to whether any KYC rules apply to values beneath the proposal’s transaction threshold.
Implementing a process that ensures all exchanges are also licensed is yet another step towards the greater solution for digital financial crime. As seen in Japan, all trading networks will be required to register officially with the Russian government further legitimizing the overall industry worldwide. If the proposal’s implementation is approved, the Russian crypto scene will look very different to today’s however currently remains undeclared.
With a proposal in line with Western guidelines, accepting this new process will help legitimize Russian digital transactions, and deter notions that Russia may have intentions of banning crypto activity. In fact, recent developments offer clarity in this matter, indicating that Russian regulators do not intend to push for a ban. Russian parliament officials are currently deciding on Bitcoin guidelines for the nation.