Russian banks to disclose client crypto holdings

Russia is tightening the noose on cryptocurrency owners with its central bank now planning to oblige financial institutions to include their customers’ coin holdings in disclosure statements.

The latter are issued for various purposes and often accompany income and asset declarations such as those filed by civil servants and government officials as a corruption prevention measure.

Bank of Russia to mandate cryptocurrency disclosures

The Central Bank of Russia (CBR) wants to see information about cryptocurrencies in the statements issued by commercial banks and financial firms.

The documents concern the payment accounts and bank deposits of clients and are usually issued when holders need to report their balances to other organizations.

The regulator proposes to also list “digital financial assets,” as defined by Russian law, like tokens issued on private blockchains and tokenized securities, for example.

That’s according to a draft recently published by the monetary authority in Moscow and quoted by the local crypto news outlets Bits.media and RBC Crypto this past Tuesday.

It amends an existing CBR directive defining the data that must be featured in the statements often filed by civil servants, when they report their personal income and assets to the state.

Russian lawmakers, and their family members, as well as employees of the central bank and all state-owned corporations are obliged to submit these “anti-corruption” declarations, too.

If adopted as is, the directive will require financial institutions to reveal the current crypto holdings of customers, income received from their sale and proceeds from mining, starting from July 1, 2027.

The amendments suggested by the Bank of Russia are based on the new law “On Digital Currencies and Digital Rights,” which came into effect on September 1 of this year, as reported by Cryptopolitan.

The legislation, passed by both houses of Russian parliament in July and signed by President Putin in early August, is the country’s first attempt at comprehensive crypto regulation.

It legalized key transactions with cryptocurrencies, such as investment, trading and exchange to fiat money. While it doesn’t ban Russians from owning coins it prohibits their use in domestic payments.

Russian regulations restrict cryptocurrency use

Companies and citizens can now buy and sell crypto, with purchases limited to less than $4,000 a year per intermediary for non-qualified investors and transfers to non-custodial wallets banned.

They are allowed to also send digital money abroad and spend it in cross-border settlements, apparently to circumvent fiat restrictions imposed as part of Western sanctions over the war of Ukraine.

However, all transactions within the country’s jurisdiction must be processed by authorized trading platforms to be considered legal, and coins must be kept with state-approved digital depositories.

The Russian cryptocurrency market, valued at an estimated $44 billion in digital-asset holdings, will be regulated in stages, with the enforced digital currency law establishing general rules while government agencies elaborate secondary regulations.

Under the framework, the Central Bank of Russia is responsible for registering and licensing market participants, including developing compliance standards and qualification criteria for investors.

The monetary policy regulator oversees the circulation of cryptocurrencies in the Russian economy while the Federal Financial Monitoring Service (Rosfinmonitoring) identifies suspicious flows.

The Federal Tax Service (FNS) should ensure that crypto investors pay their taxes. Russian residents are obliged to report transactions involving addresses that are not administered by domestic depositories.

All transactions must be carried out exclusively through licensed intermediaries. Penalties for illegal turnover and other violations will be determined by the summer of next year.

The federal Russian government, along with the Ministry of Finance (Minfin) and other departments are also closely involved in the regulatory process, as noted by the RBC.

Despite legalizing crypto for the first time, Moscow is evidently limiting its use while pushing for wide adoption of its digital ruble, which was launched for public use also at the start of September.

Another media report this week suggested that Russia may follow China’s example with the digital yuan and stimulate the use of its state-issued coin by offering discounts, bonuses, and even cashback to active users.