Cryptocurrency and mining: regulation in the Russian Federation

The report noted:

"As cryptocurrency has grown in popularity, illicit activities on the blockchain have also become more diverse. For example, some criminals operate mostly outside the blockchain but move funds into the blockchain to launder money.

We report annually on some specific categories – stolen funds, darknet markets and ransomware, to name a few. However, as crypto crime diversifies including all types of crime, the illicit ecosystem in blockchain is becoming increasingly professionalized, and the number of organizations and networks using cryptocurrency is growing, as well as the sophistication of their operations. In particular, we are seeing the emergence of large-scale blockchain services that provide infrastructure for various types of illicit activities, helping to launder illicitly obtained cryptocurrency".

According to the report, $40.9 billion in cryptocurrencies in 2024 was generated by cryptocurrency wallets linked to illegal activity. And these are currently minimum estimates; the numbers will be adjusted further as new data is revealed. To give an example, the company points out that in its 2023 report, published in January 2024, showed preliminary figures of $24.2 billion in cryptocurrency receipts on wallets linked to illicit activity for 2023. Subsequently, the updated estimate for 2023 was $46.1 billion.

Figure 3 is a screenshot of an image from Chainalysis report illustrating the volume of cryptocurrency transfers to wallets believed to be associated with illicit activity over the 2020–2024 period.

Figure 3. Screenshot of an image from Chainalysis.com from the report "Crypto crime Report"

The maximum amount is recorded in 2022, with the 2024 adjustment forecast to reach $51.4 billion.

The following report of the Bank of Russia on the topic of interest, published on November 7, 2022, is the information and analytical report "Decentralized Finance"[19] (hereinafter – "Decentralized Finance" Report).

In the report, the concept of decentralized finance is stated as follows:

"DeFi is a new model for organizing finances in which there are no intermediaries, transactions are carried out automatically using smart contracts executed on Distributed Ledger Technology (DLT), and users exercise direct control over their assets <…>.

The paper describes the DeFi phenomenon, which is based on the decentralized principle of storing and controlling crypto assets.* Such DLT-based digital tokenized solutions as digital financial assets secured by stablecoins can have the character of crypto assets. Crypto assets use encryption-based cryptographic methods to protect data from unauthorized access and alteration that are already widespread and outside the financial sphere.

Looking ahead, the DeFi sphere also potentially includes central bank digital currencies (CBDCs) and tokenized non-cash currencies, which can be designed on different technologies. Thus, the concept of crypto assets is not exclusively related to private cryptocurrencies, which are not directly analyzed in the report.

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Примечания

1

See: Sobranie zakonodatelstva Rossiiskoi Federatsii. – 2020. – № 31. – Art. 5018.

2

Federal Law No. 221-FZ, dated August 8, 2024, "On Amendments to Certain Legislative Acts of the Russian Federation" amends this provision, which will be discussed in Chapter 2, "Definition and Legal Status of Digital Currency".

3

See: Sobranie zakonodatelstva Rossiyskoy Federatsii. – 2024. – № 33. – Art. 4917.

4

See: Sobranie zakonodatelstva Rossiyskoy Federatsii. – 2024. – № 33. – Art. 4918.

5

See: Sobranie zakonodatelstva Rossiyskoy Federatsii. – 2024. – № 33. – Art. 4919.

6

See: Sobranie zakonodatelstva Rossiyskoy Federatsii. – 2024. – № 44. – St. 6489.

7

See: Sobranie zakonodatelstva Rossiyskoy Federatsii. – 2024. – № 49. – Art. 7409.

8

URL: http://government.ru/news/44519/ (accessed on 06.01.2025).

9

URL: https://cbr.ru/Content/Document/File/132241/Consultation_ Paper_20012022.pdf (accessed 25.01.2025).

10

URL: https://cbr.ru/Content/Document/File/141992/report_ 07112022.pdf (accessed 25.01.2025).

11

URL: https://cbr.ru/Content/Document/File/162005/analytical_re port_10072024.pdf (accessed 25.01.2025).

12

URL: https://cbr.ru/press/pr/?file=27012014_1825052.htm (accessed on 06.01.2025).

13

URL: https://www.garant.ru/products/ipo/prime/doc/71714604/ (accessed on 06.01.2025).

14

URL: https://base.garant.ru/71584452/ (accessed on 06.01.2025).

15

URL: https://cbr.ru/Content/Document/File/132241/Consultation_ Paper_20012022.pdf (accessed 25.01.2025).

16

URL: https://www.coincheckup.com/global (accessed on 31.01.2025).

17

URL: https://www.coingecko.com/ru/Cryptocurrencies/Ethereum (accessed on 06.02.2025).

18

URL: https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/ (accessed on 08.02.2025).

19

URL: https://cbr.ru/Content/Document/File/141992/report_0711 2022.pdf (accessed 25.01.2025).