Russia is drafting a legal framework for confiscating illicit bitcoin. The draft law would also make it illegal to carry out operations with cryptocurrencies in Russia and will treat such transactions as financial crimes.
The Russian Ministry of Finance has drafted a list of steps that the government needs to take in order to confiscate illicit Bitcoin. The proposals were submitted by Deputy Minister Alexey Moiseev at an official meeting, but are yet to be enacted into law.
Russia has drafted a legal framework for confiscation of illicit Bitcoin. The draft is still in circulation, and the country’s president has yet to sign it, but if signed into law, this would make Russia the first nation to have such a law. Read more in detail here: is cryptocurrency legal.
Attorney General Igor Krasnov told RIA Novosti today that the Russian Attorney General’s Office (Genprokuratura) is working on a slew of new criminal code revisions that would enable law enforcement authorities to legitimately seize illegally obtained Bitcoin (BTC) and other cryptocurrencies.
“We’ve made revisions to a number of regulating legislative acts so that cryptocurrencies in unlawful circulation are not only recognized as a crime but also have a mechanism to lawfully take and confiscate them,” he told the site.
When it comes to criminal matters, cryptocurrencies are now considered as property by Russian courts. However, Krasnov noted that in order to create “unified and sustainable law enforcement operations,” a distinct legal definition of “cryptocurrencies” must be developed.
“I think that bringing the notion of cryptocurrencies and other virtual assets to criminal law by adding the required legislative rules would make this easier,” he continued.
Uncertainty in the legal system
According to Nikita Soshnikov, a former senior lawyer at Deloitte CIS and head of licensed crypto exchange Alfacash, the agency’s recent crypto-focused project is nothing new. In an interview with, he said that similar negotiations have been going on in Russia since at least 2019.
“At the moment, there are no legal frameworks in place in Russia for confiscation—and, more significantly, the subsequent selling of seized property in the form of cryptocurrency.” However, this did not prevent law enforcement officials from taking such goods, according to Soshnikov.
For example, in February, a military court in Moscow ordered the seizure of Bitcoin from two former FSB investigators, Aleksey Kolbov and Sergey Belousov, who were sentenced to 12 and 9 years in jail for extorting $1 million in Bitcoin, respectively.
“How was it accomplished?” The memory card on which these coins were saved was seized in the normal ‘physical’ fashion. But there’s another issue: “How can I obtain access to cryptocurrencies in other situations?” Soshnikov remarked. “Transferring crypto without a private key is difficult, which is exactly its main benefit over traditional financial products.”
Not your wallet, not your wallet, not your wallet, not your wallet, not your wallet, not your wallet
Similarly, the Genprokuratura may make demands to collect funds kept on centralized crypto exchanges, in addition to confiscating illegal coins in the past. It is presently unable to compel an exchange to comply.
“In general, huge centralized crypto exchanges have worked with law enforcement organizations for a long time, mostly in Western nations.” “None of them want to get into a fight with the authorities, particularly in locations where citizens are of great importance as consumers and investors—the United States, the United Kingdom, EU nations, and so on,” Soshnikov added.
And this is presumably one of the primary reasons why decentralized exchanges, or DEXs, are experiencing a rising flood of new customers, even while Bitcoin deposits on their centralized equivalents continue to decline.
“Users flock in droves to decentralized trading platforms, which are theoretically incapable of transferring users’ assets to anybody owing to their design,” Soshnikov concluded.
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