The government of the Russian Federation has submitted a draft law aiming to facilitate the state seizure of cryptocurrency by defining it as property within criminal law.

The new legislation comes in response to a growing number of investigations and court cases involving crypto assets in Russia with judicial and law enforcement authorities facing difficulties in legally justifying and technically executing their confiscation.

Russian authorities seek to regulate crypto seizure in criminal proceedings

The executive branch of the government in Moscow has filed draft legislation with the State Duma, the lower house of Russian parliament, seeking to “reduce the risks associated with the circulation and use of digital currency in criminal activities.”

The bill, which has been in the making for some time, appeared on the legislature’s website this week, the Interfax news agency revealed, following earlier reports that the government has elaborated a mechanism for the seizure of crypto assets in such cases.

Cryptocurrency has been already recognized as property under Russia’s Law “On combating the legalization (laundering) of criminally obtained incomes and the financing of terrorism” in its provisions on fighting corruption.

Until now, however, this legal definition was missing from the country’s other criminal laws, hindering investigations into crime involving crypto and the review of relevant property claims.

According to the explanatory note, the new bill will introduce the same legal concept, treating digital currencies like Bitcoin (BTC) as property, to the Russian Federation’s Criminal Code and Criminal Procedure Code.

Its sponsors have highlighted that the specific characteristics of cryptocurrencies, like remote access to the funds, require a prompt reaction from investigative bodies when they come across digital coins during criminal proceedings.

They further point out that in the absence of appropriate legal mechanisms, existing Russian legislation does not allow law enforcement officials to secure such assets. Difficulties arise from the different methods of storing cryptocurrencies as well.

Russian government to fine-tune crypto seizure procedures through secondary legislation

Earlier in April, the business news portal RBC reported that the Russian government had finalized a set of procedures that would allow investigators to confiscate crypto. The proposed amendments will now legalize their actions regarding cryptocurrency identified as material evidence.

The draft law requires that seizures be carried out with the help of specialist whose job will be to ensure the safety of the confiscated assets. This will include seizing physical devices, such as hardware wallets, and taking other measures to prevent transactions, including by transferring the coins to government-controlled wallets if the authorities have managed to establish access to the digital cash.

These procedures will be further regulated through secondary legislation, Interfax noted. The legal changes come in response to requests from Russian law enforcement and judicial officials who have been dealing with an increasing number of cases involving cryptocurrencies.

Earlier in April, the Director of Russia’s Federal Bailiff Service, Dmitriy Aristov, admitted the agency was trying to find a way to convert nearly $90 million worth of Bitcoin seized from a former official convicted of corruption in order to forfeit the digital money for the state.

Aristov and other officials have urged the Russian government to legalize the circulation of cryptocurrencies, at least for this kind of purposes. The Central Bank of Russia is unwilling to permit crypto transactions outside the “experimental legal regime” it recently proposed.

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