The objective of this project is to detect illicit activities involving cryptocurrencies. Russia will allocate USD 10.3 million for its first stage, which will take place from 2021 to 2023.
By using artificial intelligence tools, Russia will seek to analyze transactions with Bitcoin and other cryptocurrencies to reduce their anonymity. According to government officials, the project is aimed at detecting drug trafficking, tax evasion, cybercrime, contract killings, and financing of extremism.
The “Transparent Blockchain” project will focus on (BTC), Ether (ETH), Omni (OMNI), and privacy-seeking coins like Dash (DASH), and Monero (XMR), according to a local news agency.
The initial stage of “Transparent Blockchain”, which will run from 2021 to 2023, will cost around RUB 760 million (equivalent to about USD 10.3 million). Every year, the Government will allocate a portion of the federal budget that comes from taxpayers to this project.
A meeting between President Vladimir Putin and a group of representatives of the IT industry, which they held on June 10th, led to the creation of “Transparent Blockchain”. Shortly after, Putin ordered the prompt approval of the project to begin preparations for its execution starting in 2021.
There are great secrecy and lack of details on the subject, beyond the announcements that the Government has made. However, Russian news media have reported that there is already a prototype of the system that has been used in operations against drug trafficking.
Cryptocurrencies Are Legal, But Not For Making Payments
The government announced this project a few days after the enactment of the Law on Digital Financial Assets, which Putin signed on July 31st. This law, which will take effect on January 1st, 2021, legalizes cryptocurrencies but prohibits using them to make payments.
Russian experts and enthusiasts warned at the time that this law would delay the development of the cryptocurrency industry in the country. On June 30th, Putin said that it was “important to lift legislative and administrative barriers for technological pioneers,” but the law seems to contradict his words.
From the moment when the law comes into effect, the Russian Central Bank must approve the issuance of ERC-20 stablecoins and tokens. Besides, the bank itself will be in charge of making them available to qualified investors.
Following the enactment of the law, Sberbank announced that it is preparing for the launch of Sbercoin. This crypto asset will maintain parity with the ruble (RUB) and will be aimed at corporate customers of this institution.
Despite its negative aspects, the sanctioned law represents an advance against the prohibition of Bitcoin and other cryptocurrencies that had prevailed in Russia since 2014. In that year, the State Attorney-General determined that no individual or legal entity can use anonymous payment systems and cyber-currencies.
Finally, that ban has not stopped cryptocurrency users. For instance, many of them frequently use the stablecoin Tether (USDT) in international trade between Russia and China. This tool allows traders to avoid taxes and evade regulations.
By Alexander Salazar
