Russian Bank Wants to Ban Users From Using Non-Custodial Crypto Wallets
Quick take:
- The Association of Banks of Russia wrote to the central bank to handle non-custodial wallets.
- Russian banks want to ban citizens from holding crypto in non-custodial wallets.
The Association of Banks of Russia wrote a letter to the central bank to criminalize storing of crypto in non-custodial wallets.
This is indicated in a letter sent to the Central Bank and departments by the Association of Russian Banks (ADB). The ADB believes that this approach is more reasonable. At the same time, they acknowledge that criminal culpability should likely not be imposed for just possessing such wallets but rather for refusing to transfer keys to authorized authorities.
Hot and cold
The Asian Development Bank established the notion of foreclosure on non-custodial cryptocurrency. They refer to digital assets held outside of accounts on cryptocurrency exchanges and wallets. If exchange operators de facto control money in custodial wallets (similar to bank deposits), then digital assets and keys in non-custodial wallets are in the user's own control. And it is he, not the exchange, who is in charge of their protection.
These wallets are the safest since they aren't subject to regulatory concerns, are anonymous, and are exceedingly tough to hack. Non-custodial wallets are divided into "hot" and "cold."
The first is app-based, with access via mobile apps like Metamask.
The second is hardware, with physical access to the wallet, which looks like a flash drive. Popular devices include those by Ledger.
According to Anatoly Kozlachkov, ADB Vice President, there are severe issues with recovering cryptocurrencies held by debtors and criminals in non-custodial wallets.
This concept was submitted to a working group of the State Duma's expert council on cryptocurrency legislation. The concept of criminal culpability was opposed by a number of market players and lawmakers.
The ABR thinks that using a criminal law approach to crypto-market regulation will allow all subjects to be treated equally "as people liable to pay taxes," removing the inconsistency between the Bank of Russia and the Ministry of Finance's systems.
As far as regulations are concerned, there are currently none for both non-custodial and custodial wallets in Russia.
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