The Russian Central Bank reports a sharp increase in cryptocurrency-related activity

Last updated: May 26, 2024 7:30 pm EDT | 2 minute read

The Central Bank of Russia says it has noticed a significant increase in citizens’ transactions cryptocurrency exchanges and peer-to-peer crypto trading platforms.

According to Russian media RBCthe bank released a financial stability report, making several observations on Russian citizens’ crypto transactions.

The bank wrote about the trends noted from the fourth quarter of fiscal 2023 to the first quarter of fiscal 2024.

The regulator wrote that “total web traffic of Russian users on the websites of the largest cryptocurrency platforms” increased by 16.4% “compared to the second and third quarters of 2023.”

Russian Central Bank: Citizens More Active on Crypto Platforms

The bank said Russians made a total of 104.6 million visits to cryptocurrency exchanges and P2P sites.

The average monthly number of holders of unique Russian IP addresses at “major cryptocurrency exchanges” also increased by 15.1%, the bank said.

This means that 7% of all traffic on these major foreign cryptocurrency exchanges comes from Russia, the bank added.

However, this is still lower than the peak of 9% reported by the bank in the first quarter of fiscal 2023.

The bank said it used a tool called Transparent Blockchain to make its calculations.

The tool was developed by the Federal Financial Monitoring Service (also known as Rosfinmonitoring)in an effort to combat cryptocurrency-based money laundering.

Russian Officials Say Transparent Blockchain Allows Them to Identify the “True” Identity of Crypto Users Across Multiple Devices blockchain protocols.

The report suggests that Russians remain enthusiastic about larger-cap cryptoassets Bitcoin (BTC) AND Ethereum (ETH). They also appear to use stablecoins pegged to the US dollar USDT AND USDC.

In total, over the same period, transactions “potentially attributable” to Russians amounted to more than $50.2 billion.

This, analysts noted, includes not only cryptocurrency transactions, but also P2P payments, remittances and “payments for goods and services.”

Cryptocurrencies are risky, regulator warns

RBC noted that the Russian Central Bank report “does not publish a list of monitored crypto platforms.”

However, he added that “previous Central Bank financial risk reports” included data from platforms such as Binance, Bybit, MEXC, KuCoinand other.

Part of the reason for the surge in transactions may be due to Binance’s exit from the Russian market.

The bank believes that at the time of its exit from Russia, Binance had cornered just under half of the nation’s cryptocurrency market.

And the bank also warned Russian cryptocurrency users about the “dangers” and risks” of holding cryptocurrencies in Russia.

It was written that it was “necessary to evaluate the risks associated with possible sanctions by hostile countries”.

He said that as tensions between the West and Moscow increase, Russian USDT and USDC holders risk “losing access to their funds.”

The bank said such losses “cannot be ruled out if [Russians] are blocked by stablecoin issuers.”

RBC noted that in the US and UK, regulators are increasing scrutiny of “stablecoin transactions,” as “control over cryptocurrency exchanges is tightened.”

The bank also warned that governments of “hostile nations” could order cryptocurrency exchanges to “strengthen control over user transactions, including within the framework of sanctions restrictions.”

But in its “recommendations” for Russian “financial organizations,” the bank hinted at future Russian regulations.

The bank “recommended” that domestic financial providers “do not offer financial instruments linked to cryptoassets.”

He also advised banks “not to advertise services related to the circulation of cryptoassets”.

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