The Russian Ministry of Justice has developed legislation that recognizes digital currency as property subject to seizure and confiscation, Deputy Justice Minister Vadim Fyodorov said during the St. Petersburg International Legal Forum.
“The Ministry of Justice has drafted a bill that recognizes crypto assets as items subject to seizure and subsequent confiscation,” the official said. “In addition, it is proposed to establish requirements aimed at ensuring the seized coins’ safety. Depending on the specific type of [digital] currency, an investigator will be able to seize physical hardware wallets with access codes to them or ask the court to impose a ban on operations with them.”
According to him, “the plan is to ask specialists familiar with procedures for these actions to draft measures to ensure the seized assets’ security before they are confiscated or used to settle the plaintiff’s claims.” Fyodorov added that the bill had been sent to the State Duma and would be considered in the first reading in the near future.
According to experts, the Justice Ministry’s initiative to facilitate the seizure and confiscation of digital assets reflects the growing need for legal regulation of cryptocurrencies in Russia. Having clear procedures in place for the seizure of crypto wallets or judicial prohibition of transactions with digital assets could improve the prosecution of crimes involving crypto assets, including cases of money laundering and financing of illegal activities.
“However, technical implementation remains a key issue: how exactly will the security of the confiscated assets be ensured and how will courts justify seizure and what will guarantee the protection of rights of honest owners,” economist Dmitry Afanasyev notes. “Furthermore, it is important to consider the de-centralized nature of cryptocurrencies as confiscation of a wallet does not always mean actual control over the money.”
The bill requires further improvement involving IT experts and the crypto community in order to prevent conflict of law and abuse, the expert concludes.