Russian Government Moves to Legalize Crypto Confiscation in Criminal Cases
The Russian government is about to officially recognise terms related to cryptocurrency in its criminal code, setting the stage for courts and police to seize digital assets lawfully in criminal proceedings.
Citing sources within the Government Commission on Legislative Activity, a Vedomosti report says that the Ministry of Justice has prepared a bill that will add essential definitions of crypto into the Criminal Code and the Criminal Procedure Code.
The action, which was approved by the commission, is likely to reach the State Duma soon.
Crypto Still in Legal Limbo in Russia
Russian law currently does not define digital assets such as Bitcoin (BTC) or Ethereum (ETH) in the context of general criminal law.
Although crypto has been considered intangible property in bankruptcy and some anti-terrorism and anti-corruption cases since 2020, the majority of criminal cases have no legal avenue for the seizure of crypto.
Police say this void in the law stifles investigations and asset seizure concerning virtual currencies.
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Difficult Seizure Processes Identify Need for Overhaul
Association of Lawyers of Russia Chairman Vladimir Gruzdev underlined that a lack of clarity in law makes police rely on outside specialists while dealing with crypto assets.
"Now, coins can only be confiscated with a specialist's assistance," he added, highlighting that hardware wallets can be physically seized, whereas hot wallets need to have coin transfers made to special addresses controlled by the government.
The new legislation will create a framework to:
Legally acknowledge cryptocurrencies as property that can be confiscated
Legally define wallets and digital storage devices
Streamline procedures for securely dealing with and confiscating these assets
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Lawyers Weigh In: Support and Skepticism
Although many in Russia's legal profession endorse the effort, others raised some legitimate concerns about retroactive enforcement and technical preparedness.
Adviser Maria Bakakina on criminal law wondered:
"What was the legal ground on which courts have already frozen crypto before?"
She pointed to a case in 2022 in St. Petersburg, where prosecutors froze 24 wallets related to a case of theft — although no formal crypto system existed then.
Daniil Markhiyev, a criminal law specialist, called on legislators to provide protection for third parties and innocent bitcoin holders:
"There need to be assurances that law-abiding users won't be touched," he said.
New Tools for Converting Seized Bitcoin
Earlier this month, Dmitry Aristov, the head of the Federal Bailiff Service, said that his agency had come up with mechanisms to exchange seized Bitcoin into rubles to allow the Treasury to recover money from crypto-based criminal cases.
That is an indication of increasing state preparation to address digital assets not only from a security perspective but also from a fiscal and operational angle.
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