Surge in Russian Crypto Transactions
The Russian Central Bank has observed a notable increase in citizens’ transactions on cryptocurrency exchanges and peer-to-peer (P2P) trading platforms.
Financial Stability Report Insights
According to RBC, the bank’s recently published financial stability report highlights significant trends in Russian crypto transactions. The report covers the period from the fourth quarter of FY2023 to the first quarter of FY2024.
Increase in Web Traffic
The report indicates that the total web traffic of Russian users on major cryptocurrency platforms surged by 16.4% compared to the second and third quarters of 2023.
Rising Activity on Crypto Platforms
Russians have made a total of 104.6 million visits to crypto exchanges and P2P sites. The average monthly number of unique Russian IP addresses accessing major crypto exchanges rose by 15.1%.
Russian Contribution to Global Traffic
Approximately 7% of all traffic on major overseas crypto exchanges originates from Russia. However, this figure is still below the 9% peak reported in the first quarter of FY2023.
Use of Transparent Blockchain Tool
The bank utilized the Transparent Blockchain tool, developed by the Federal Financial Monitoring Service (Rosfinmonitoring), to calculate these figures. This tool helps identify the true identity of crypto users across various blockchain protocols.
Preference for Major Cryptoassets
The report suggests that Russians continue to favour higher-cap cryptoassets like Bitcoin (BTC) and Ethereum (ETH). Additionally, USD-pegged stablecoins like USDT and USDC are commonly used. Transactions potentially attributable to Russians amounted to over $50.2 billion during this period, encompassing crypto trades, P2P payments, remittances, and payments for goods and services.
Crypto Risks Highlighted by the Regulator
Despite the surge in activity, the Russian Central Bank warned of the inherent risks associated with crypto holdings. It emphasized the necessity to assess risks related to potential sanctions from unfriendly countries, particularly for holders of USDT and USDC. The bank cautioned that such holders might face loss of access to their funds if blocked by stablecoin issuers.
Increased Regulatory Scrutiny
RBC noted that the report did not list the monitored crypto platforms. However, past reports included data from platforms like Binance, Bybit, MEXC, and KuCoin. The exit of Binance from the Russian market may have contributed to the recent spike in transactions, as Binance previously held a significant share of the Russian crypto market.
Recommendations for Financial Organizations
In light of rising geopolitical tensions, the bank recommended that Russian financial organizations avoid offering financial instruments tied to crypto assets. It also advised banks against advertising services related to the circulation of cryptoassets.
Future Regulations Expected
The bank hinted at forthcoming regulations for the crypto market, suggesting a cautious approach for financial organizations amid increasing scrutiny from regulators in the US and UK, who are tightening control over crypto exchanges and transactions involving stablecoins.
News Reference
