Courts in the Russian Federation have been refusing to provide legal protection to crypto owners who failed to report their holdings to the state, and a lawyer has now taken this injustice to the country’s constitutional court.

His complaint targets Russia’s current legislation on digital assets that requires cryptocurrency holders to notify the tax authority of any such possessions in a timely manner if they are to expect their ownership rights to be defended by the judiciary in the future.

Lawyer refers crypto case to Russia’s Constitutional Court

Russian courts have been rejecting claims related to cryptocurrencies if their owners have not informed the Federal Tax Service (FNS) of their digital holdings. The practice violates rights guaranteed by the Constitution, according to a Russian lawyer.

Marat Amanliev, also a human rights activist, has recently filed a complaint with Russia’s Constitutional Court, attacking this particular requirement featured in the country’s law “on digital financial assets” (DFAs), the business news portal RBC reported.

Amanliev is acting on behalf of a client who sought a lower court to restore ownership of crypto assets that an acquaintance refused to return to him. The claim was rejected based on his failure to notify the FNS of his holdings in advance.

The lawyer is now challenging a provision in the DFA law that allows Russian courts to consider cryptocurrency-related disputes only if the claimant has submitted detailed information about their wallets and transactions with the FNS.

He pointed out that the respective notification procedure has not been implemented yet, creating a legal paradox. Crypto owners are currently unable to properly defend their interests in the absence of an FNS-issued reporting form.

The activist also insists that court decisions of this kind violate a number of articles in the Russian Constitution, among which guarantee equality before the law and inviolability of private property as well as provisions that prohibit the limitation of judicial protection.

Amanliev stated:

“We ask the Constitutional Court to recognize the norm as unconstitutional and confirm that the right to judicial protection cannot depend on the fulfillment of administrative formalities, especially when it is impossible to fulfill them.”

Court ruling can become a turning point for Russia’s crypto space

Marat Amanliev’s appeal has been accepted for review by the Constitutional Court of the Russian Federation which is still expected to determine the date of consideration, the report noted.

The lawyer is convinced that a high court resolution on the controversial matter could potentially become a turning point not only for Russia’s judicial practice regarding cryptocurrencies but also its digital economy as a whole.

Russia has partially recognized cryptocurrencies as “digital financial assets” and “property” in some laws but is yet to introduce these legal definitions throughout its legislation. Judicial and law enforcement authorities have complained, for example, about the lack of legal grounds to confiscate crypto assets in criminal proceedings.

Last week, the government in Moscow submitted a draft law to the lower house of the Russian parliament aiming to facilitate the state-authorized seizure of cryptocurrency by defining it as property within the country’s Criminal Code and Criminal Procedure Code.

The bill seeks to implement a mechanism for crypto seizure and comes after the head of the Federal Bailiff Service announced earlier this month that the agency was trying to figure out a way to convert and forfeit nearly $90 million worth of BTC seized in a corruption case.

At this point, Russian authorities have a lot of work to do to regulate all aspects of cryptocurrency relations, but they have already recognized the potential of Bitcoin and the like in certain areas.

Although opposed to legalizing the free circulation of digital coins, the Central Bank of Russia proposed in March to establish a special “experimental legal regime” that would allow “qualified investors” to buy and sell crypto and Russian firms to use cryptocurrencies in settlements.

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