Russia to Reclassify Bitcoin as Property, Boosting Crypto Crime Fight

Russia is set to reclassify Bitcoin and other cryptocurrencies as property, according to a proposal by the Russia Investigative Committee. The move, if approved, would significantly reshape the country's stance on cryptocurrency trading and usage.

The proposed amendments, announced by ICR Chairman Alexander Bastrykin at a February board meeting, aim to treat Bitcoin and other cryptocurrencies as property. This would legally enable authorities to confiscate crypto in criminal cases and impose criminal liability for transferring electronic payment instruments to third parties.

Currently, Russian law lacks clear guidelines for handling cryptocurrency in criminal cases. The new amendments would address this by treating crypto as property, allowing authorities to seize and freeze digital assets when necessary. One of the key concerns of the investigative committee is the use of third-party bank accounts, or "droppers," to trade and use cryptocurrency. The proposal intends to criminalize this practice, which authorities believe will help reduce digital financial crimes.

According to the Investigative Committee, digital crimes in Russia increased by 10% in 2024 compared to the previous year, with nearly 20% involving minors. However, the exact number of Bitcoin and crypto-related offenses remains unclear. Legal experts remain divided on whether the proposed criminal liability applies to crypto wallets. While some argue that crypto wallets do not qualify as electronic payment instruments, others assert that digital and hardware wallets should be included.

While crypto is already recognized as property under Russian law, the proposed amendments could streamline its treatment in criminal cases. The present key concern is how authorities can track, freeze, and recover stolen or illicitly obtained cryptocurrencies. Experts stress the importance of improving crime detection and asset recovery in the crypto space to increase the number of solved cases.