Russia's New Crypto Analysis System Can Track Dash and Monero

Russia’s main financial regulator is developing a new cryptocurrency analysis tool to track major cryptocurrencies such as Bitcoin (BTC) and privacy coins.

Russia’s Federal Financial Monitoring Service, a federal service for combating money laundering and terrorist financing, is reportedly planning to build a new analytical platform to track cryptocurrency transactions through artificial intelligence.

Dubbed the “Blockchain Transparency” platform, the new system aims to track the transfer of digital financial assets and identify crypto service providers in order to combat illegal activities related to digital assets, local news agency RBC reported on August 10.

According to the report, the new system is able to “degrade” to some extent the anonymity of transactions involving Bitcoin, Ethereum (ETH), Omni (OMNI), and privacy-focused cryptocurrencies like Dash (DASH) and Monero (XMR).

The financial regulator has reportedly successfully piloted a prototype system to combat drug trafficking. The report states that the system was developed in collaboration with the Lebedev Institute of Physics of the Russian Academy of Sciences, a major Russian research institution.

The project has reportedly been funded so far with extrabudgetary resources, but will require additional funding. According to preliminary data, Russia's "Blockchain Transparency" platform will require about 760 million rubles ($10.3 million) from the federal budget from 2021 to 2023. The new platform's target customers reportedly include major financial institutions such as the Russian Central Bank.

The news comes shortly after Russia officially passed its main cryptocurrency-related bill, “Digital Financial Assets.” Set to be passed in January 2021, the new law prohibits the use of cryptocurrencies like Bitcoin as a form of payment.

In early August, Russian lawmakers passed new amendments to the National Payment System Law, banning anonymous deposits to major online wallets such as Yandex, WebMoney, PayPal, and Kiwi.