Russian Financial Regulator Calls For Global Crypto Regulations

News, Regulation | October 30, 2018 By:

Russia’s Financial Monitor Service (FMS) said that member states of the Financial Action Task Force (FATF) should adopt its recommendation to control the supply and flow of cryptocurrencies.

Founded in 1989, the FATF is an intergovernmental organization that develops policies to combat money laundering. Its primary policies issued are the Forty Recommendations on money laundering from 1990 and the Nine Special Recommendations (SR) on Terrorism Financing (TF). In 2015, it introduced guidance on a risk-based approach to digital currencies, calling all countries to take coordinated action in preventing the use of virtual currencies for crime and terrorism financing

Earlier this month, the FAFT announced changes to its standards regarding digital currencies and firms involved into crypto-related activities. The updated guidelines would require jurisdictions worldwide to license or regulate crypto exchanges and digital wallet providers, as well as issuers of initial coin offering (ICO). Per the changes, jurisdictions should ensure that crypto service providers are subject to AML and CFT regulations.

In an interview with Russian news outlet Izvestia, Pavel Livadny, the Deputy Director of FMS, said that the agency contacted the FATF to request an intergovernmental initiative that could control the exchange of cryptocurrency, their storage and transactions.

“All FATF members must change the legislation to include new crypto ecosystems,” Livadny said. “They should introduce registration and license parameters for the companies developing in the space, which include exchanges, initial coin offering projects, and cryptographic administrators. FATF should also monitor the companies’ activities and standards for anti-money laundering.”

Livadny added that based on FAFT’s guidelines, a cryptocurrency can be digitally handled and transferred in the case of payments and investments. But, at the same time, it should not be made into securities, mainstream and virtual money, coins or other financial assets, he said.

Livadny also revealed that the FMS would likely implement controls for crypto transactions worth over 600,000 rubles ($9,000 USD). He believes that controls over large crypto transactions will “increase the level of investor protection and the transparency of the industry.”

At present, there is still no legislation for cryptocurrency in Russia, with a draft bill to formalize the gray areas of the crypto space still winding its way through in the Russian parliament.

Earlier this year, Anatoly Aksakov, the Chairman of the Russian State Duma Committee on Financial Markets, said that “cryptocurreny is rather complicated, it is largely transboundary. So, taking into account its characteristics, we wouldn’t like to write down norms that wouldn’t work.”