According to the Central Bank of Russia (CBR), the involvement of banks in high-risk P2P transactions has decreased by 2.8 times compared to 2023.
In its Financial Stability Report for the second and third quarters of 2024, the Central Bank highlighted significant progress in reducing illegal cryptocurrency transactions. Through collaborative efforts with banks, the volume of high-risk P2P transactions involving the banking sector has declined markedly, which the regulator believes reduces the use of cryptocurrencies in illegal activities.
The Central Bank pointed out that anonymous crypto exchanges and P2P services often utilize proxy accounts and cards ("drops") for transactions. Tackling these schemes has become a priority for financial monitoring, with the CBR providing banks with active methodological support.
Despite these efforts, the volume of cryptocurrency flows involving Russian investors grew by 18% during the same period, reaching RUB 4.8 trillion. Simultaneously, traffic to cryptocurrency platforms surged by 56.5%, with Russian users generating 166.9 million visits. The second quarter of 2024 saw a record high in user activity since early 2022, with nearly 88 million visits in just three months.
In the third quarter of 2024, there was an outflow of Russian funds from cryptocurrency exchanges. The total value of assets in cryptocurrency wallets fell by 15.8% compared to March, amounting to RUB 651 billion. Of this, 69% was held in Bitcoin, 21% in Ethereum, and 10% in stablecoins. The regulator attributes this decline to reduced market volatility following a sharp growth in late 2023 and early 2024, as well as anticipation of new regulatory measures in the U.S., the launch of Ethereum ETFs, and interest in meme coins.
The Central Bank also noted the rising popularity of mini-apps within messaging platforms, where users can earn cryptocurrency through simple tasks. However, the regulator believes these projects, like meme coins, have minimal market impact due to their low capitalization despite attracting new users.
Cryptocurrency gained further support in Q4 2024, partly influenced by the U.S. presidential election. The newly elected president pledged a softer regulatory approach, support for the mining industry, and the creation of a strategic Bitcoin reserve, which fueled investor interest.
In conclusion, the Central Bank warned about the risks of "cryptoization" in the economy, which could limit central banks' ability to stabilize inflation. In countries with high cryptocurrency adoption, raising key interest rates may become necessary to counteract these effects.
The law firm Nadmitov, Ivanov & Partners offers consultations on digital and information law, technology regulation, electronic services, fintech, personal data protection, and cryptocurrency transactions.
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