The Central Bank of Russia is deploying an advanced centralized monitoring platform aimed at identifying and preventing OTC cryptocurrency transactions.

According to Bogdan Shablya, head of the Financial Monitoring and Currency Control Department at the Central Bank of Russia, this system will target individuals who lend their bank accounts and cards to conduct cryptocurrency-related transactions, copyright infringement websites, drug stores, and online casinos – often referred to as 'droppers' or 'mules'.

According to a report from media outlet RBC, this is Russia's first large-scale coordinated effort to establish a systematic mechanism for controlling OTC cryptocurrency transactions at the banking level. Unlike the traditional approach that only monitors suspicious transactions in individual banks, this new platform will build a centralized database accessible to all financial institutions nationwide.

This move stems from the growing concerns of the Russian authorities, as exchanges are believed to be one of the largest sources using informal banking networks, putting pressure on the national financial system.

Targeting OTC cryptocurrency infrastructure

The new monitoring platform of the Central Bank of Russia marks a sophisticated breakthrough in efforts to reduce or stop the operations of illegal or unregulated cryptocurrency trading networks. The focal point of the system is a centralized database designed to track individuals suspected of coordinating these transactions.

These 'droppers' often operate multiple bank accounts at different institutions to conduct OTC transactions, making them nearly undetectable through traditional banking monitoring systems. The strength of the platform lies in its ability to share data in real-time across the entire Russian banking network, creating a uniform protective barrier against suspicious activities.

When an individual attempts to open a new bank account, the system will automatically check their information against the central database of identified subjects. Immediately, the bank will receive alerts about suspicious cases, allowing preventive measures to be taken before the account is abused for illegal transactions.

According to Bogdan Shablya, the system has identified approximately 700,000 individuals involved in informal transactions. This is a significant step in addressing the loopholes of current monitoring measures, where traders can easily open new accounts at other banks after being detected by an organization.

The scale of 'dropper' operations

The scale of illegal banking activities in Russia is far exceeding initial estimates. According to data from the Central Bank of Russia, about 10 million citizens have transferred money into accounts identified as 'dropper' cards.

It is noteworthy that many of them may be unaware that they are inadvertently participating in illegal crypto transactions. While suspicious banking activities through business accounts have decreased to only 5 billion rubles (50 million dollars) in the first nine months of 2024, trading through 'dropper' personal accounts has surged to 39 billion rubles (390.6 million dollars) during the same period.

This growth is significantly higher than in previous years, with trading volume increasing from 37 billion rubles (370.6 million dollars) in 2022 to 44.9 billion rubles (449.7 million dollars) in 2023. Banking officials believe that exchanges, along with online gambling and other digital services, are the main drivers of this activity.

Impact on the crypto market in Russia

The deployment of the centralized monitoring platform marks a major turning point in how Russians approach the crypto market. By targeting the banking infrastructure supporting OTC transactions, the Central Bank of Russia hopes to minimize unofficial transactions while steering digital asset trading through licensed channels.

The immediate impact may force traders to abandon traditional OTC methods based on the banking system. As this platform makes it more challenging to use personal bank accounts for cryptocurrency transactions, traders may be compelled to seek alternative solutions or turn to officially approved platforms.

In the long term, the platform is expected to accelerate the development of regulated cryptocurrency infrastructure in Russia. However, the Central Bank still maintains a cautious stance towards the crypto sector.

Start international payments with Bitcoin and crypto

Additionally, after making legal adjustments to allow the use of Bitcoin and other cryptocurrencies to cope with Western sanctions, Russian companies have begun using these cryptocurrencies for international payments. Russian Finance Minister Anton Siluanov stated:

'These transactions have begun to be implemented. We believe that these transactions need to be expanded and further developed. I believe that this will happen vigorously in the coming year.'

He also emphasized that the use of cryptocurrency in international payments represents a trend of the future.

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