Russia has banned anonymous deposits to online wallets

Users must now undergo identity verification procedures before they can deposit to online wallets

Image of aerial view of St Petersburg, Russia
This move is expected to curb illegal financial activity across the country

In an attempt to curb illicit financial activity, the Russian Government has formally banned all anonymous deposits to online wallets across the country. This move is expected to impact over 10 million users across the country and was implemented yesterday.

Lawmakers have explained that this initiative targets a variety of illegal activities, such as terrorist financing and the illegal drug trade.

Beyond cryptocurrencies, online wallets and payment processors are mostly going to be affected by this ban. Prior to this, services such as WebMoney, Kiwi, Yandex and PayPal are popular in the country and maintain millions of accounts that users top up anonymously with cash. While the precise numbers are unknown, others also use these anonymous wallets to purchase cryptocurrency as well.

Dmitry Kirillov, a senior lawyer of tax at the Bryan Cave Leighton Paisner, and a teacher at the Moscow Digital School, was quoted by the RBK to say that these new measures will not have an effect on the blockchain space initially.

Since the law primarily deals with electronic money operators, international digital asset trading platforms are currently outside of such regulation and are not yet subject to these new restrictions. However, this may affect those who buy cryptocurrency through exchanges with ATMs.

Antonina Levashenko, the head of the Russian Center for Competence and Analysis of OECD Standards at the RANEPA as well as a member of the Commission on the Legal Support of the Digital Economy of the Moscow Branch of the Russian Lawyers Association, supplemented this insight by explaining that as Russia works on refining its anti-money laundering procedures, the existing ban may also be applied to virtual currencies as well.

“Will it affect cryptocurrencies? Currently, these changes have been implemented only in relation to electronic money in accordance with the amendments to the law on the national payment system. But in the near future, undoubtedly, yes. FATF standards are always applied to new technologies by analogy: if at first the standards were prescribed for classic bank accounts, then they were first extended to electronic wallets and prepaid cards, and then to virtual wallets for cryptocurrencies.”

The EXMO Exchange Development Director, Maria Stankevich, added that the anonymity surrounding cryptocurrencies end when they start interacting with fiat cryptocurrencies. As a result, exchanges that have not yet introduced mandatory user verification while working with fiat channels are “walking on very thin ice.”

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