Russia Likely to Recognize Bitcoin and Other Cryptocurrencies in Upcoming Year to Curb Money Laundering

The Russian government is mapped out to potentially acknowledge Bitcoin and other cryptocurrencies as soon as next year. This overhaul in perspective highlights a drastic change compared to last year when the Russian Finance Ministry threatened to incarcerate users of such cryptocurrencies. The government, with the advocacy of its Deputy Finance Minister, Alexey Moiseev, now purports to recognize the currencies with the aim of counteracting money laundering.

According to a report by Bloomberg, Moiseev was quoted stating, “The state needs to know who at every moment of time stands on both sides of the financial chain. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

This plan of action by Russia follows on the heels of similar indications from China. A few months prior, [China signalled that its Central Bank could also be considering recognition of cryptocurrencies](https://www.techbooky.com/chinese-central-bank-cryptocurrency/). While cryptocurrencies, particularly Bitcoin, are gaining traction, concerns have emerged linking them to money laundering due to their insufficient regulation by government entities.

As Bloomberg explains, “tracking cryptocurrencies could become the latest tool enlisted in the Bank of Russia’s battle against money laundering, which has seen hundreds of lenders lose their licenses over the last three years.” As traditional money laundering schemes plausibly wane, with operations such as fake trades and loans used to move money abroad falling by 50% to $771 million last year according to central bank data, the need to supervise and regulate cryptocurrency entities becomes more pressing.

Bitcoin has seen a considerable ascent in its value, gaining 28% this year and is currently traded at a price over $1,100.

Several foreign banks have found themselves entangled in investigations surrounding Russian money laundering schemes. Notably, the Royal Bank of Scotland Group Plc was asked for information by the U.K. in March regarding an alleged money laundering ring that involved monetary movements through Moldova and Latvia from 2010 to 2014.

In a precedent-setting instance, Deutsche Bank AG was penalized $629 million by U.K. and U.S. authorities this January for non-compliance in regulations that resulted in the bank assisting wealthy Russians to move approximately $10 billion abroad using transactions that might have concealed financial crime.

Substantial illicit Russian outflows have been reported between 1994 and 2011, resulting from crime, corruption, and tax evasion, tallying up to at least $211.5 billion, with illegal transfers amassing an astonishing $552.9 billion, as per Washington-based Global Financial Integrity.

In the grand scope of things, while it seems Western governments remain indecisive on the matter of regulating cryptocurrencies, Eastern powerhouses China and Russia appear eager to assert a more significant role in this growing financial landscape.