Russia's State Duma has passed a law establishing procedures for cryptocurrency seizure in criminal cases, but experts highlight significant gaps.
On February 10, the State Duma of Russia approved a new law that outlines the procedures for seizing and confiscating cryptocurrencies during criminal investigations, officially categorizing digital currencies as property.
Despite establishing a legal framework for confiscation, experts express concerns that the law lacks crucial details. It does not provide methods for valuing volatile crypto assets, storage protocols, or guidelines for working with foreign cryptocurrency exchanges that may be impacted by sanctions.
Key Provisions of the Law
The law mandates that the seizure of digital assets and related devices occurs during investigative actions with a specialist present. The protocol requires documentation of the asset type, quantity, and identifying details, while access information is to be securely stored.
Digital currencies may be transferred to a designated address for safekeeping, contingent on government-determined procedures. Once seized, transactions involving these assets can be restricted based on court rulings, and cryptocurrency platforms are obligated to provide relevant information for investigations.
The law still requires final approval from the Federation Council and the president before taking effect ten days post-publication.
Framework Lacks Specificity
Developed by the Ministry of Justice in May 2025, the law primarily offers a general framework without addressing specific enforcement details. Notably, it does not establish a method for calculating damages from crypto assets, a point highlighted by the State Duma's Financial Market Committee.
According to Ignat Likhunov, founder of the legal agency Cartesius, courts will likely assess damages based on the market value of assets at the time of the offense, which complicates the recovery of lost profits during asset seizures.
“The criminal proceedings primarily allow for compensation of actual damages, not lost income,” Likhunov noted, emphasizing the challenges in claiming lost profits in civil cases.
He also raised concerns about the feasibility of transferring seized funds, particularly if owners of non-custodial wallets refuse to provide access to their digital assets.
International crypto platforms may hesitate to comply with Russian law enforcement requests due to existing sanctions, complicating future interactions.
“Major international platforms may ignore requests from Russian law enforcement, especially if they have subsidiaries in EU jurisdictions with service restrictions,” he stated.
Additionally, stablecoins pose unique challenges, as their issuers can only freeze assets at the behest of U.S. or EU regulators.
With no defined cybersecurity measures for safeguarding state-controlled wallets, the risk of asset misappropriation remains a concern.
“The involvement of an IT specialist in seizures is procedural and does not guarantee effective protection against misappropriation,” Likhunov warned.
Shift from Unified Storage Platform
The Ministry of Finance was tasked with exploring a state digital platform for storing confiscated cryptocurrencies by October 1, 2024. However, the new law shifts this idea towards a system of state-controlled crypto wallets, with operational regulations still pending.
Andrey Tugarin, founder of GMT Legal, indicated that a proposed law for comprehensive digital currency regulation could address some of these issues by imposing mandatory requirements on crypto exchanges for asset storage in digital depositories.
“Depositories will ensure the secure storage of assets, fulfilling the ‘technical feasibility’ mentioned in the seizure laws,” Tugarin explained.
Discussions regarding the inclusion of cryptocurrencies in criminal legislation for theft cases have been ongoing since 2021, with the Prosecutor General's Office previously proposing norms for recognizing digital assets as crime objects. Although some procedures have been applied, their effectiveness has varied.
