Russian Central Bank Raises Concerns over Surge in Crypto Activity
The Russian Central Bank has recently observed a significant increase in crypto transactions made by Russian citizens on both crypto exchanges and peer-to-peer trading platforms. In its financial stability report, the bank highlighted various trends that it had noticed between the fourth quarter of the 2023 fiscal year and the first quarter of 2024.
According to the report, the total web traffic of Russian users on the largest cryptocurrency platforms increased by 16.4% compared to the previous two quarters. In total, Russian citizens made 104.6 million visits to crypto exchanges and P2P sites during this period. Additionally, the average monthly number of unique Russian IP address-holders on major crypto exchanges rose by 15.1%. However, this is still lower than the peak of 9% reported in the first quarter of the previous fiscal year.
To determine these figures, the Russian Central Bank utilized a tool called Transparent Blockchain, developed by the Federal Financial Monitoring Service, to combat money laundering through cryptocurrencies. This tool enables Russian officials to identify the true identities of crypto users on various blockchain protocols.
The report indicates that Russian citizens continue to show interest in high-cap cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). They also appear to use stablecoins like USDT and USDC, which are pegged to the US dollar. Overall, transactions potentially linked to Russians amounted to over $50.2 billion during the specified period. These transactions include not only crypto trades but also P2P payments, remittances, and payments for goods and services.
While the Russian Central Bank did not disclose the specific crypto platforms it monitored, previous financial risk reports from the bank have included data from platforms such as Binance, Bybit, MEXC, and KuCoin. The recent surge in crypto activity may be attributed in part to Binance’s exit from the Russian market, as the platform previously held nearly half of the nation’s crypto market share.
In light of the increased crypto activity, the bank issued a warning to Russian users about the risks involved in holding cryptocurrencies in the country. It emphasized the importance of assessing the risks associated with potential sanctions from unfriendly countries. With tensions rising between Russia and the West, the bank cautioned that Russian holders of USDT and USDC could face the loss of access to their funds if they are blocked by stablecoin issuers.
Furthermore, the bank highlighted the tightening control over crypto exchanges in the US and UK and warned that governments of unfriendly nations could impose stricter regulations on user transactions, including within the framework of sanctions restrictions. As a recommendation for financial organizations in Russia, the bank suggested that they refrain from offering financial instruments tied to cryptoassets and avoid advertising services related to the circulation of cryptocurrencies.
In conclusion, the Russian Central Bank’s report underscores the growing concerns surrounding the surge in crypto-related activities among Russian citizens. It highlights the risks and potential consequences associated with holding cryptocurrencies, particularly in the face of geopolitical tensions and tightening regulations.