The Russian Federal Financial Monitoring Service will start tracking cryptocurrency transactions. The agency has selected a contractor to develop the platform. This entity is affiliated with the Savings Bank, one of Russia’s largest financial institutions.

Rosfinmonitoring records cryptocurrency wallets used for illegal purposes

The Russian financial regulator Rosfinmonitoring selected a contractor to build a platform that will be used to track cryptocurrency transactions in the country. According to Russian encryption media reports, the winning RCO company is managed by Rambler Internet Holding, a subsidiary of banking giant Sberbank.

Russia will track crypto transactions with the help of Sberbank companies

According to the unified information system portal in the field of procurement, the bid price of the project is estimated at 14.7 million rubles (over 200,000 US dollars). The money will be used to enable regulators to closely monitor illegal transactions involving cryptocurrencies. According to Rosfinmonitoring, the plan aims to ensure compliance with the law and increase transparency in the encryption industry.

The platform is expected to perform multiple tasks, such as tracking the flow of digital financial assets and identifying and analyzing participants in the crypto market to assess their economic roles and behaviors. The RCO must create and maintain a database of cryptocurrency wallets related to illegal activities and the financing of terrorism.

Russia will identify crypto users suspected of criminal activities quoted Moscow Digital School assistant Efim Kazantsev as saying that, unlike other tools that analyze encrypted transactions, the new platform should also reveal the identities of encrypted users suspected of participating in illegal activities. However, he pointed out that for closed blockchains, the disclosure of user data will depend on the network. Kazantsev elaborated that regulators and law enforcement agencies may only be able to access this information during ongoing investigations.

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The processing of cryptocurrency transactions also involves recording data outside the blockchain. For example, for the Internet provider, Maria Stankevich, the development director of the cryptocurrency exchange Exmo, explained. Using this type of information, an IP address can be established and the sender can be identified.

Russia will track crypto transactions with the help of Sberbank companies

Nikita Zuborev, a senior analyst at Russian exchange aggregator, added that even on confidential blockchains such as Monero and Zcash, transaction participants can be deanonymized. He believes that the latest big data analysis tools can handle this problem.

According to Rosfinmonitoring, Bitcoin (BTC), Ethereum (ETH) and Monero (XMR) are the most popular cryptocurrencies among criminals. Earlier this year, the agency announced the development of an encrypted tracking system called “transparent blockchain.” The motivation for the new construction is still unclear.

Do you think Russia will be able to track and identify crypto transactions and users? Share your thoughts on this topic in the comments section below.

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