FameEX Hot Topics | Russian Law Enforcement Plans Crypto Asset Seizure, Seeks Authorization to Establish Wallets

The Prosecutor General's Office of the Russian Federation is proposing that investigative bodies be permitted to establish and manage cryptocurrency accounts and wallets to hold seized digital assets that can be sold later for the benefit of the state. In a roundtable discussion, Madina Dolgieva, a representative of the Office's Main Criminal Procedural Department, argued that there's no need to amend the law to grant such powers. According to Dolgieva, this can be done through a government decree, which will not require a lengthy process of changing the Criminal Procedure Law.

She also suggested that the Russian Federal Bailiff Service should be authorized to auction seized cryptocurrency, requiring a separate government decree or amendment to the current law governing enforcement proceedings. Dolgieva's comments followed a demand by Igor Krasnov, the head of Russia's Prosecutor General's Office, that crypto exchanges providing services to Russian customers should register in the country and share user data with Russian law enforcement.

Krasnov also emphasized the need for more comprehensive regulations for digital assets in Russia, stating that recognizing cryptocurrency as property is insufficient to combat criminal activity in the current difficult international situation. According to Krasnov, this situation increases the risks of exploiting vulnerabilities through crypto.

While American and European law enforcement agencies already have established procedures for seizing and selling crypto assets related to criminal activities, Russia's proposal signals a significant step toward cryptocurrency regulation in the country. In July 2021, Finland's customs service announced the sale of confiscated bitcoin worth over $50 million. And recently, the US Justice Department seized cryptocurrency worth over $112 million linked to fraudulent investment schemes. It remains to be seen how Russia's proposed measures will be implemented and the impact they will have on the cryptocurrency industry.

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