Rosfinmonitoring, Russia’s financial monitoring agency, announced on Friday that it was using software to track transactions involving cryptocurrencies and hoped to improve its capabilities shortly. Moscow prepares to usher in regulation on what one lawmaker called “crypto-mania.”

For a long time, the Bank of Russia has expressed skepticism regarding cryptocurrencies, citing concerns about the financial system’s stability. Furthermore, the Bank of Russia has advocated for a complete ban on trading and mining, which conflicts with a government eager to regulate the industry.

Yuri Chikhanchin, the director of Rosfinmonitoring, said Russia has already detected criminal instances using cryptocurrencies. He added that the agency aims to strengthen its systems and uncover transactions and blockchains now concealed from view.

According to Chikhanchin, it is not feasible to cover everything at this time because not all nations are keen to control the business.

“It is extremely tough when bitcoin accounts move into the unregulated zone, and we don’t understand who is on the other end,” he added. “It is challenging when cryptocurrency accounts go into the unregulated zone.” “However, I believe we will still successfully complete this mission.”

Because the underlying blockchain technology that underpins cryptocurrencies records transactions but does not record the identities of wallet owners, cryptocurrencies are notoriously difficult to trace.

On Thursday, the chairman of the finance committee in the lower house of the Russian parliament, Anatoly Aksakov, said that a draught piece of legislation on the regulation of cryptocurrencies would be presented to the house in the fall.

Comparing “crypto mania” to addiction in the gambling industry, which is heavily controlled in Russia, Aksakov stated, “Obviously, there will be stringent regulation.” Russia’s gambling industry is also carefully regulated.

According to what he stated, “the same has to be done with crypto exchanges and trade.” “The phenomena is real, and one cannot deny its existence.”

The cryptocurrency business has found itself in the sights of authorities, concerned that a recent crash in the highly volatile market might have repercussions for the whole financial system.

The decline, initiated by the fall of two significant tokens in May, has led to the crypto lender Celsius stopping withdrawals and the crypto hedge fund Three Arrows Capital falling into liquidation. Both of these events occurred in Singapore.

The Russian government’s central bank has indicated that it is receptive to cryptocurrencies being used for foreign settlements and has approved other transactions using digital assets.

Additionally, Aksakov anticipates that legislation regarding mining cryptocurrencies will be adopted shortly. The government intends to tax this industry.

In contrast to payment companies, most cryptocurrency exchanges initially rejected calls to cut off all Russian users. This sparked concerns among lawmakers in the United States that digital assets could be used to circumvent Western sanctions imposed on Moscow due to its actions in Ukraine.

The major exchanges have said that they would comply with the fines by barring users who have been sanctioned. In April, Binance stopped allowing users in Russia who have cryptocurrency holdings worth more than 10,000 euros to make deposits or engage in trading.

After years of arguing that cryptocurrencies could be used to launder money or finance terrorism, the Russian government has only recently come around to supporting the use of private cryptocurrencies. Russia has plans to issue its digital rouble, but the government has only recently come around to supporting the use of private cryptocurrencies.

Elvira Nabiullina, governor of the Central Bank of Russia, has stated that the bank cannot accept investments in cryptocurrencies, which account for approximately $5 billion worth of transactions each year made by Russians. She has proposed that trading cryptocurrencies and mining for them be illegal.

Earlier this year, other officials from the central bank said that they did not see any potential for the use of cryptocurrencies in the Russian financial system. They cited the dangers to financial stability that may arise from the growing volume.