Lawyers assess threat posed by Bank of Russia’s new recommendations for bitcoin exchanges

Recommendations The Bank of Russia’s guidelines on banks’ monitoring of potentially suspicious operations, including those related to bitcoin exchanges, are not law, but reflect a trend of indirect suppression by the regulator of cryptocurrency turnover in Russia. This view was expressed by lawyers interviewed by ForkLog.

The Bank of Russia “continues to tighten the screws” and calls on credit institutions to keep a particularly close watch on individuals’ accounts, said Efim Kazantsev, a lawyer and expert at Moscow Digital School.

The central bank itself says that the measures described in the document are aimed at protecting consumers’ interests and reducing suspicious activity.

The recommendations provide that if a private individual’s banking operations meet two or more of the signs listed in the Bank of Russia document, the account holder may face consequences:

“Specifically, banks will have full right to refuse such individuals from conducting operations, block their accounts and even terminate bank service agreements — all under the guise of money laundering and financing of terrorism,” said Mikhail Tretyak, partner at the Digital Rights Center law firm, ForkLog.

The managing partner at GMT Legal, Andrey Tugarin, stressed that the Bank’s current methodological recommendations are not a new law and “not even obligations.”

According to him, the primary aim of the Bank was to identify platforms where illicit operations may take place and warn banks about their nature for subsequent blocking:

“Cryptocurrency exchanges are a supplement, as they have become very widespread in Russia.”

Tugarin noted that anti-money-laundering provisions governing funds obtained through criminal activity were in place even before the current recommendations, so “the grounds for banks to block cards due to suspicious transactions remain as they were.”

“There is now a positive judicial practice in Russia where judges accept bases showing the economic sense of completed operations with digital currency and point to the source of funds into the client’s bank account, which in turn leaves no grounds for blocking cards,” concluded Tugarin.

Trading in cryptocurrency is not prohibited by Russian law.

There is now a positive judicial practice in Russia where judges accept bases showing the economic sense of completed operations with digital currency and point to the source of funds into the client’s bank account, which in turn leaves no grounds for blocking cards,” concluded Tugarin.

In August, ForkLog reported that the Sverdlovsk Regional court ordered Sberbank to unblock the cards of a resident of Revda who was selling cryptocurrency on an exchange after he provided documents confirming the source of funds.

Tugarin noted that for future crypto exchanges the Bank’s document changes little:

“These methodological recommendations do not block the activity of exchanges. P2P exchange in Russia is not prohibited, and these recommendations do not prohibit it either.”

Mikhail Tretyak also noted the Central Bank’s tendency toward indirect suppression of cryptocurrency turnover in Russia.

He also reminded that on October 1 amendments to Bank of Russia Regulation 375-P come into force. According to them, operations related to turnover of digital currency are effectively classified as potentially aimed at legitimizing proceeds of crime or financing terrorism.

In Tretyak’s view, the Bank will continue such policy, “not wanting to directly engage with regulation of cryptocurrencies, but wanting to have a fully controlled digital ruble.”

The Bank of Russia often describes Bitcoin as a pyramid and as a risky instrument for investment. At the same time, the Bank intends to implement a digital ruble.

Head of the Bank Elvira Nabiullina spoke about the inadmissibility of comparing cryptocurrencies with the digital ruble, since the latter will be backed by the central bank.

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