Russia Drafts Bill Classifying Cryptocurrencies as Property to Combat Financial Crimes

Russia is taking a significant step towards regulating cryptocurrencies by drafting new legislation that classifies digital assets as property. This move allows law enforcement to seize cryptocurrencies during criminal investigations, marking a shift in the country's approach to combating financial crimes involving digital currencies.

The bill, drafted by the Russian Ministry of Justice, aims to address the challenges posed by the anonymous nature of cryptocurrencies, which are often used by criminals due to their lack of central authority and difficulty in tracking. By treating cryptocurrencies as property, investigators will have the authority to confiscate digital assets and block transactions during probes. This includes hardware wallets, storage devices, and other tools that provide access to digital assets. Courts may also issue orders to freeze transactions during investigations.

Vadim Fedorov, a representative from the Ministry of Justice, highlighted the need for this legislation during the St. Petersburg International Legal Forum. He emphasized that the bill is part of a broader effort to modernize Russia's legal framework to combat financial crimes involving cryptocurrencies. The bill is currently undergoing review in the Russian parliament’s State Duma and is expected to be debated at the first reading soon.

Fedorov acknowledged that there are technical challenges in managing digital assets, as they exist only online and cannot be stored like traditional forms of property. However, he noted that the bill includes additional protection rules for digital assets, such as the involvement of special technical experts who will provide recommendations on how to safeguard digital currency until it is seized or its value is restored to the victims.

Despite these challenges, the proposed legislation reflects Russia's commitment to tightening control over the role of cryptocurrencies in money laundering, fraud, and illicit finance. If passed, the bill could significantly alter how Russian courts and investigators handle cryptocurrencies, further signaling the state's efforts to regulate the digital economy and protect victims of cybercrime.