ARB (Association of Banks of Russia) has suggested banning the use of non-custodial wallets for storing cryptocurrencies. This means that users will need to use traditional exchange accounts. ARB also suggested criminalizing the behavior of not providing wallet private keys to licensed agencies.
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According to the news provider center Izvestia, the Ministry of Finance responded to the proposal, saying they are ready to discuss the initiative following the law order.
As announced, the regulatory framework aims to prevent serious problems associated with recovering crypto and getting assets back in case of cybercrime.
In the case of custodial wallets, user holdings are controlled by the trading platform operators (similar to banks), while in the case of non-custodial wallets, a user controls their holdings through private keys.
Commenting on the suggestion, the banking association’s vice president Anatoly Kozlachkov said that the framework developed with the Ministry of Internal Affairs originally proposed criminalizing self-custody. However, ARB now leans more towards a softer approach that wouldn't criminalize the possession of crypto in self-custody wallets, but the refusal to provide the private keys to authorized establishments.