Russia Moves to Classify Cryptocurrency as Seizable Property

The Russian Ministry of Justice is in the process of drafting a bill that aims to classify cryptocurrency assets as property, which would make them subject to seizure in criminal proceedings. This move is part of a broader effort by the Russian government to combat crypto-related criminal activities. According to local reports, the bill is designed to address the growing use of cryptocurrencies in illicit activities, such as the sale of drugs through anonymous darknet markets.

Deputy Minister of Justice, Vadim Fedorov, stated that the Ministry of Justice has developed a bill that classifies digital currency as property for the purposes of arrest and subsequent confiscation. This classification would allow authorities to seize physical wallets and the necessary credentials, such as seed phrases, and impose bans on wallet transactions. Fedorov emphasized the involvement of experts to ensure that these assets could be seized and securely handled.

Fedorov acknowledged the unique challenges of seizing crypto assets, noting that their attractiveness to criminals is due to factors such as anonymity and the lack of centralized control. Unlike cash and valuables, digital currency cannot be physically seized and placed in a safe. This has made cryptocurrencies a preferred method for facilitating illegal transactions on darknet markets.

One notable example is Russia’s darknet market Kraken, which has seen a significant increase in crypto transactions. Despite a global crackdown on darknet platforms, including the shutdown of another Russian-based marketplace, Kraken has become the largest darknet market in Russia since the closure of Hydra in April 2022. This highlights the ongoing challenge of regulating and monitoring crypto-related activities in the region.