Russian Central Bank Reports Success in P2P Crypto Trading Crackdown

Russian Central Bank Claims Progress in P2P Crypto Crackdown

The Russian Central Bank has declared significant advancements in its efforts to curb peer-to-peer (P2P) cryptocurrency trading.

Decline in High-Risk Transactions

The bank stated that its initiatives to combat the illegal circulation of cryptocurrencies in Russia have led to a 2.8-fold reduction in high-risk P2P transactions compared to 2023.

Collaboration with Commercial Banks

According to the Central Bank’s financial stability review for the second and third quarters of FY2024, close cooperation with commercial banks has played a vital role in this effort. Together, the institutions have blocked numerous transactions linked to P2P platforms.

Regulatory Challenges in the Crypto Market

Russia’s cryptocurrency exchange market remains unregulated, despite recent legislative efforts in 2024 to introduce crypto-specific laws. The fragmented market continues to host unregulated operators offering cross-border cash transfers via crypto, fueling the growth of the P2P sector.

High Priority on Counteracting Fraudulent Schemes

The Central Bank emphasized that addressing illicit P2P schemes has become a top priority. These schemes often utilize accounts linked to fictitious individuals for transactions. Collaborative efforts with credit institutions include assisting in identifying and blocking these transfers.

Increased Crypto Usage Among Russians

Despite the reported crackdown, Russian investors’ crypto activity has risen. The regulator noted an 18% increase in crypto asset flows in FY2024, totalling $44.8 billion. Additionally, web traffic from Russian IPs to global crypto platforms surged by 56.5%, reaching 166.9 million visits.

Russians' Preference for Bitcoin

The bank revealed that Russian-held crypto wallet balances on exchanges dropped by 16% in Q3 2024 compared to March. Russians hold approximately $6.1 billion in cryptocurrency, with Bitcoin comprising 69% of these holdings, followed by Ethereum (21%) and stablecoins (10%).

Anticipation of Crypto Growth

The Central Bank observed that Russians continue to show confidence in cryptocurrency, citing reduced market volatility and optimism for long-term growth. Factors such as U.S. monetary policy changes and excitement around meme coins contribute to these expectations.

Crypto Adoption in Rewards Systems

The report highlighted the growing use of crypto in reward-based applications, particularly via chat apps. However, the Central Bank described these projects as low-capitalization ventures, similar to meme coins, despite their role in attracting new users to the crypto market.

Conclusion

While the Russian Central Bank claims progress in its crackdown on P2P trading, crypto usage among Russians continues to grow, reflecting the complexity of regulating this dynamic sector.