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Russia: banks against the anonymity of cryptocurrencies
Russia: banks against the anonymity of cryptocurrencies
Crypto

Russia: banks against the anonymity of cryptocurrencies

By Marco Cavicchioli - 13 Sep 2019

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In Russia, banks would like to eliminate the anonymity of cryptocurrencies. In fact, the Vice-President of the Association of Russian Banks, Anatoly Kozlachkov, told the local newspaper RNS that the Association is proposing to use “special software” to identify the owners of digital assets. 

While not adding details about this special software, according to Kozlachkov this measure will be used primarily to “determine the assets of debtors”. 

“The simplest example would be a case whereby you know that someone who owes you a large amount of money has Bitcoin holdings. But currently there is nothing you can do about it in a situation like this, as trading is largely anonymous, and there is no legal method for obtaining this information”.

In addition, Kozlachkov also pointed out that, to date, there have been no legal means of intervening in such cases. In this regard, the Association of Russian Banks proposes to create a two-stage mechanism.

The first phase would consist of the creation of special software to investigate public blockchains and identify the owners of the addresses, so as to know how many tokens a person has in total. 

The second phase would involve making this information usable in court so that the judges could force any debtors to hand over the private keys of their wallets or face criminal proceedings.

Kozlachkov also said that similar software already exists and is currently used by law enforcement agencies, whereas the aim of the Association is to make it public and usable by everyone. 

While this proposal seems to be somewhat naive, it is also based on observations dating back a long time, according to which it is already possible to trace the authors of anonymous transactions on most of the public blockchains, thanks to the fact that cryptocurrency exchanges do in fact verify the identities of their users. 

In other words, true anonymity at present would already be very limited, though only law enforcement and government officials have real access to data from exchanges. 

Furthermore, Kozlachkov’s proposal would violate several privacy rules, hence it is likely not to be implemented. 

Finally, it is worth noting that owners of tokens or cryptocurrencies that use decentralised exchanges, or that do not use exchanges at all, can maintain a much higher level of anonymity, not to mention the fact that there are cryptocurrencies with a high level of privacy, such as Monero, which do not record the amounts of transactions in clear text on their blockchains. 

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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