Russian authorities are seeking legal means to confiscate virtual assets such as cryptocurrencies as they already can with more traditional forms of property.
In an effort to fight cybercrime, the Ministry of Internal Affairs intends to develop legislation allowing law agencies to force criminals to hand over ill-gotten digital gains and wants proposals on the books by December 2021, according to a report from Russian news source RBC Thursday.
The Ministry of Internal Affairs will be joined by the finance regulator Rosfinmonitoring, the Prosecutor General’s Office, the Investigative Committee, the Justice Ministry, the Federal Customs Service, the Federal Security Service and the Supreme Court in developing the proposals.
Long-awaited regulation addressing crypo assets more generally has been held up in the Russian parliament, further complicating the issue. A legal definition of cryptos, perhaps as commodities or cash-equivalents, is required to allow forfeiture, according to the report. However, the definition being set out in the new rules may not be appropriate in this case.
There are other potential problems down the road for the plan, too. Regulators are aware of the difficulties of confiscating crypto residing in various wallet types protected by both encryption and user passwords, RBC sources said.
Still, authorities believe they may be able to work with exchanges to isolate and freeze funds, said Nikita Kulikov, member of the State Duma's expert council and founder of PravoRobotov Autonomous Non-Profit Organization.
Additionally, agencies may have to develop their own crypto wallets and find ways to exchange digital assets into fiat. “For these purposes, they can create a state crypto-exchange and crypto-ruble with a stable rate in which they will store the withdrawn funds,” Kulikov said.
While law enforcement moves to become acquainted with cryptocurrency, Russia’s central bank is maintaining indifference. This October, chairwoman of the Bank of Russia Elvira Nabiullina said she saw no pressing reasons to launch a digital ruble following internal research.
Russian rubles and BTC image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.