The Central Bank recommended banks to minimize participation in the circulation of cryptocurrencies

The Central Bank recommended that financial organizations minimize participation in the circulation of cryptocurrencies, including indirectly through their advertising. He formulated his position in an information letter issued just a week after the license was revoked from Qiwi Bank, one of the reasons for which was the transfer of funds in favor of crypto exchangers. However, the recommendations will complicate the provision of services for the use of digital currencies for the purposes of international payments, experts warn.

In the informational information published on February 29 letter The Bank of Russia recommended that financial organizations minimize participation in transactions with digital currencies and related financial instruments. According to the regulator, such operations are associated with high risks, not only financial, but also of involvement in illegal activities of money laundering and terrorist financing. The Central Bank directly advised to exclude the offer of services involving such transactions.

In another letter, the Central Bank recommended that trade organizers deny admission to trading in securities of issuers whose activities are related to the issuance and circulation of digital currencies. In addition, information system operators are recommended to refrain from organizing the issuance and circulation of digital financial assets (DFAs) associated with the circulation of cryptocurrencies.

One of Kommersant’s market interlocutors calls the Central Bank’s recommendations “quite tough” and believes that “despite the fact that formally non-compliance is not punished in any way, most likely the regulator will use other methods of influence.”

The Central Bank’s speech looks especially menacing against the backdrop of the revocation of the license of Qiwi Bank, which was actively involved in operations with cryptocurrencies (see “Kommersant” dated February 22).

The main message of the Central Bank is that the financial sector should not come into contact with digital currencies at all, says Oleg Ushakov, head of the Sagrada Legal legal bureau. The law contains a direct ban only on the use of digital currencies as a means of payment, the lawyer emphasizes, but the recommendations of the Central Bank are focused, among other things, on the actual refusal of even indirect participation in transactions with them.

According to the head of the Association of Participants in the Electronic Money and Money Transfer Market, Viktor Dostov, the recommendations of the Central Bank are intended to “hint” to financial organizations that the practice of issuing DFAs tied to cryptocurrencies (similar to Bitcoin ETFs, see “Kommersant” dated October 30, 2023), “the regulator will not like it, although technically, according to the law, there is such a possibility.”

The Central Bank also published methodological recommendations for identifying transactions for the purchase or sale of digital currencies using accounts registered in the name of fake individuals (drops). The Central Bank called on financiers to ensure increased attention to such operations and to request additional information and documents from clients about the nature and purposes of their actions. We are also talking about conducting an “in-depth review” of information about transactions and activities, including beneficiaries and beneficial owners.

Similar recommendations from the Central Bank were issued before, but “apparently, they were not implemented by everyone,” notes one of Kommersant’s interlocutors in the market. “Banks have both worked and will continue to work with cryptocurrencies, especially stablecoins in cross-border settlements, since sometimes this turns out to be the only possible means for conducting foreign economic activity,” says Sergei Mendeleev, head of InDeFi Smart Bank.

The consequence of the Central Bank’s recommendations may be an increase in the riskiness of such services for banks carrying out transactions with entities that help Russian importers and exporters make payments using digital currency, emphasizes Denis Polyakov, head of the Digital Economy practice at GMT Legal.

There is currently no legislative regulation of such activities. Back in the fall of 2022, Deputy Minister of Finance Alexey Moiseev admitted that the Ministry of Finance and the Central Bank agreed on the impossibility of doing without cross-border payments in cryptocurrency under current conditions. But the bill to regulate cryptocurrencies is still being developed. The State Duma recently passed a bill in the third reading that allows the use of digital financial instruments in international settlements, but in this case we are talking about purely Russian instruments that differ in their properties from cryptocurrencies.

Olga Sherunkova, Ksenia Kulikova