Russia is set to add "cryptocurrency" and crypto-related terms into the country's criminal code. This is so to provide police officers with greater authorities to tackle crypto-related crimes and confiscate coins during the investigation if need be.

According to sources close to the Government Commission on Legislative Activity, the commission has approved a bill drafted by the Ministry of Justice, with plans to submit it to the State Duma soon.

Defining Crypto in Russian Criminal Law

Currently, Russian criminal and procedural codes lack any definition of cryptocurrency, making it difficult for police and prosecutors to pursue cases involving digital assets. While previous legislation has addressed certain crypto crimes-mainly surrounding bankruptcy, counter-terrorism,and corruption-but the legislation is lacking when it comes to the handling of more general criminal cases.

At present, crypto-related terms are not defined in either the criminal code or the Criminal Procedure Code, and police and public prosecutors and this legal gap has complicated investigations and hindered asset seizure efforts.

Complicated process to Enforce crypto Regulations

The lack of proper and clear legislation has made it extremely complicated for local authorities and prosecutors to execute the crypto confiscation process.

As of now, the confiscation process would require a specialist to ensure proper handling of these assets, particularly to prevent owners or third parties from moving funds during investigations.

Police can also seize physical hardware wallets, but when it comes to online wallets, they would need to make the tedious process of transferring the coins out to a special address-identifier to ensure its safety.

Legal Community Reacts

Legal experts have welcomed the move, noting it brings much-needed clarity to the regulation of crypto-related crimes. Vladimir Gruzdev, Chairman of the Board at the Association of Lawyers of Russia, explained that the new law will formally recognize cryptoassets as items subject to confiscation and outline the procedures for doing so.

However, some lawyers have raised questions about how courts have previously managed crypto seizures and emphasized the need for guarantees to protect the rights of law-abiding individuals and third parties.

"The question immediately arises. What legal mechanism have courts previously used to seize cryptocurrency"

Many also have pointed out that the lack of established crypto seizure rules have posed significant challenges for Russian law enforcement. For example, back in 2022, a district court in St. Petersburg seized control of 24 crypto wallets, claiming at the time that the wallets contained stolen Ethereum coins.

Authorities are also considering the technical readiness of law enforcement agencies to implement these new procedures effectively.

Earlier this month, the head of the Russian Federal Bailiff Service revealed new methods for converting seized Bitcoin into state revenue, highlighting the growing importance of crypto asset management in Russia’s legal system.