Binance has previously worked with the Russian Association of Banks as part of its specialist center on cryptocurrency regulation.
Keeping your own bitcoin keys is being considered illegal by a major Russian banking organisation.
According to local news source Izvestia, the Association of Banks of Russia, which represents over 300 Russian banks and financial institutions, has called on lawmakers to make it illegal to store cryptocurrency outside of centralized exchanges on noncustodial wallets.
Noncustodial or self-custodial wallets, unlike accounts at centralized crypto exchanges, allow users to store crypto without relying on a third party who might freeze, block, or confiscate the user’s crypto assets. This basically allows investors to “be their own bank” by giving them complete control over their crypto and the private key that goes with it.
The Russian Association of Banks, on the other hand, does not appear to be a fan of allowing consumers to control own cryptocurrency. Due to the “severe problems” of taking crypto on noncustodial wallets from debtors and criminals, the organization has devised a framework for foreclosure on such wallets, according to the group’s vice president Anatoly Kozlachkov.
The framework, which was created in collaboration with the Ministry of Internal Affairs, intends to make it illegal to store cryptocurrencies like Bitcoin (BTC) on noncustodial wallets. The organization also advocated making refusal to deliver keys to authorized authorities a criminal offense.
In mid-April, the group allegedly wrote a letter to numerous institutions and regulators, including the Bank of Russia and the Federal Financial Monitoring Service, with the suggested structure.
Due to the anonymity of owners and the technological challenge of accessing such money without their agreement, the bankers stated that their idea is hampered by technical issues connected with forced access to noncustodial wallets. “As a result, enforcing seizure of such assets is almost impossible,” the study states.
The Organisation of Banks of Russia is a prominent local banking association that was created in 1990 and by early 2022 covered about 90% of Russia’s banking infrastructure. Binance, the world’s largest cryptocurrency exchange, joined the organization in February, with Olga Goncharova, Binance’s head of government relations in Russia and the Commonwealth of Independent States (CIS), leading the association’s specialist crypto center.
The Russian and CIS branch of Binance has declined to comment on the situation.
The disclosure comes as noncustodial wallets are becoming more scrutinized by international regulators.
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The European Parliament’s Economic and Monetary Affairs Committee voted in favor of a regulation amendment in late March, which might jeopardize exchanges’ capacity to deal with noncustodial crypto wallets. After the authorities froze the crypto assets of COVID-19 demonstrators, Canadian regulators apparently noted tweets by Coinbase CEO Brian Armstrong and Kraken CEO Jesse Powel asking users to take their bitcoin off of exchanges and into self-hosted wallets.