In a significant regulatory development, the Russian Ministry of Justice is drafting legislation to classify cryptocurrency as property, enabling law enforcement to seize digital assets in criminal cases. The bill, announced by Deputy Minister of Justice Vadim Fedorov, marks another step in Russia’s broader crackdown on crypto-related crime.
Crypto to Be Treated as Property Under New Bill
According to Fedorov, the ministry’s bill will legally define digital currencies as property for the purpose of arrest and confiscation. This shift will provide a clearer legal framework for authorities to seize crypto assets, particularly in cases involving drug trafficking, fraud, and other illicit activities where crypto plays a central role.
“The Ministry of Justice has developed a bill that classifies digital currency as property for the purposes of arrest and subsequent confiscation,” said Fedorov.
The proposal comes amid growing concerns over the use of crypto by criminals in Russia. Anonymous transactions and the absence of centralized oversight have made digital assets particularly attractive for activities conducted on the darknet.
Addressing Technical Challenges in Confiscation
Recognizing the technical complexities of crypto seizure, the ministry plans to involve cybersecurity and blockchain experts to ensure proper handling of assets. This includes not only seizing hardware wallets but also securing private keys and seed phrases, without which the assets would be irretrievable.
Courts may also be granted authority to freeze wallet activity, potentially halting transactions and withdrawals while investigations are underway.
Crypto and Russia’s Darknet Economy
The move is a direct response to the surge in crypto-driven darknet activity. Russian authorities have cited alarming trends, such as the rise of Kraken a darknet market unrelated to the regulated crypto exchange where crypto transactions have jumped 68% since the takedown of Hydra, a major illicit marketplace shut down in 2022.
“Digital currency cannot be physically seized and placed in a safe, as is the case with cash and valuables,” Fedorov noted, emphasizing the need for new legal and technical measures.
A Step Toward Stricter Oversight
Russia has been tightening its grip on the cryptocurrency sector, recently introducing pilot programs for “super-qualified” crypto investors and planning the creation of a national exchange. The latest bill aligns with these broader efforts, signaling that crypto assets will face more formal legal scrutiny in Russia moving forward.
If passed, this legislation would make it easier for law enforcement to prosecute financial crimes involving digital assets placing crypto wallets and related credentials firmly within the scope of property law.
Russia’s plan to recognize crypto as property marks a pivotal moment in its fight against digital crime. As the country navigates the complexities of blockchain-based finance, this legal framework could become a model for how other jurisdictions balance innovation with enforcement. With darknet crypto use on the rise, Russian authorities appear committed to ensuring that digital anonymity does not come at the expense of national security and public safety.
