Russian Government Approves Mechanism for Seizing Bitcoin in Criminal Cases

The Russian authorities have approved the implementation of a mechanism for the seizure of cryptocurrency as part of criminal cases. This was reported by RBC, citing its own sources.

Amendments to the Criminal Code and the Criminal Procedure Code, which recognize digital assets as property, have been endorsed by the governmental commission on legislative activities.

The document outlines the procedures for investigations and establishes the conditions for freezing cryptocurrencies.

The amendments clarify how investigators can confiscate cryptocurrency. Depending on the storage method, assets can either be transferred to specialized addresses or the devices containing the wallets or access codes can be seized. This measure aims to safeguard the funds and block transactions until the criminal case is resolved.

However, experts highlight the challenges of implementation. For instance, owners might refuse to grant access to their wallets or conceal their devices, and law enforcement may encounter difficulties when dealing with international crypto platforms that do not consistently cooperate with Russian authorities. Additionally, there is no established mechanism for selling confiscated digital assets for state revenue.

If the amendments are adopted, cryptocurrency could be utilized in the qualification of crimes such as theft, fraud, or corruption. Seizures of assets would allow for their blockage, and in the event of a guilty verdict, confiscation of funds for the benefit of the state could be possible.

Legal experts have noted that while blockchain technology facilitates the tracking of transactions, the lack of technical access to the keys or passwords could pose a barrier. Addressing these challenges may require the involvement of specialists or international collaboration.

In practical terms, implementing these measures could encounter significant technical and legal obstacles. For instance, if a wallet owner does not provide access to the assets, law enforcement, even with expert assistance, is unlikely to gain direct access to the funds due to the nature of blockchain technology.

“Indeed, there’s a chance that passwords are saved on a phone or are reused across different applications, but if the owner practices proper digital hygiene, accessing the wallet will be challenging. The same applies to discovered access keys in the ‘pension’ folder: if the wallet owner maintains adequate caution, such ‘clues’ will not be left behind,” explained Osipov.

The lack of a well-developed mechanism for engaging with foreign cryptocurrency platforms, many of which are beyond Russia’s legal jurisdiction, adds further complexities, the expert emphasized.

Osipov also pointed out that the absence of comprehensive legal regulation of digital currencies in the country means that the seizure and sales of confiscated assets could occur in a way that disrupts the balance of rights for market participants, increasing the risk of corruption or undue pressure on users.

Recall that in March, the Chairman of the Investigative Committee Alexander Bastrykin stated that a law recognizing cryptocurrencies as property is under consideration.

Later, the head of the FSSP, Dmitry Aristov, declared that the agency is developing a mechanism for confiscating bitcoins to transfer them to state revenue.