A Russian baking association has presented a motion to criminalize those holding cryptocurrencies in non-custodial wallets, such as the ones offered by Binance and Coinbase.
The Association of Banks of Russia (ADB), consisting of over 300 Russian banks and financial institutions, has sought to criminalize those storing crypto outside exchanges and custodial wallets in a letter penned to the Russian Central Bank’s other financial authorities in the country.
The ADB believes that custodial wallets, which are owned by crypto exchanges, are more secure, not subject to regulatory risks, and are “extremely difficult to hack. Meanwhile, the ADB says that there are “serious difficulties” in seizing funds from non-custodial wallets, such as on the ones offered by Binance and Coinbase.
Furthermore, the ADB cited that lack of ownership identity related to non-custodial wallets was an issue that needed to be addressed and believes that the criminal law approach will likely discourage storing funds in non-custodial wallets, whose data cannot be recovered without the owners’ private key.
Russian Experts Criticize Bill
Crypto experts in the region criticized the stance taken by the ADB, saying that the approach would hinder legalization. They also presented various technical difficulties in tracking non-custodial wallets held by citizens. However, many regulatory authorities did suggest that ADB’s proposal warranted attention.
The Russian Government is currently reviewing a crypto bill that provides regulatory clarity related to trading, mining, and other activities in the crypto markets. However, many regulatory factions are still pessimistic when it comes to the growing wave of digital assets and seek to gain more control over the industry.
Should the ADB decision push through, Russian banks will gain more oversight on crypto funds held by Russian citizens. This would help with thefts and stolen funds, while also keeping a tighter track of tax payments. At the same time, citizens may be penalized for using non-custodial wallets such as Binance, Coinbase, and MetaMask, possibly limiting their influence within the region.