Russia Plans Criminal Code Update to Include Crypto Terminology

The Russian government is moving to incorporate cryptocurrency terminology into its criminal code, aiming to clarify how digital assets can be seized during investigations.

New Russian Crypto Legal Framework Advancing

According to reports from the newspaper Vedomosti and state-run media agency TASS, the Ministry of Justice has drafted legislation that has received approval from the Government Commission on Legislative Activity. Sources close to the commission indicate the bill will soon be forwarded to the State Duma for consideration.

Currently, cryptocurrency-related terms lack definitions in both Russia's Criminal Code and Criminal Procedure Code, which law enforcement officials claim significantly hampers their investigative work in cases involving digital assets. While legislation passed in 2020 allows courts to recognize crypto as intangible property in bankruptcy proceedings, and subsequent amendments have addressed cryptocurrency in counter-terrorism and corruption cases, standard criminal proceedings still lack established legal frameworks for handling digital assets.

Vladimir Gruzdev, Chairman of the Board at the Association of Lawyers of Russia, explained that the current process for confiscating cryptocurrency is extremely complicated, requiring specialists to "guarantee the correct handling of such a specific type of property." While physical hardware wallets can be seized, confiscating assets from online "hot" wallets requires transferring coins to special addresses to ensure security.

Legal Experts Respond to Ministry's Initiative

The proposed legislation aims to officially recognize cryptoassets as items subject to confiscation and establish clear procedures for these actions. Gruzdev noted that the draft law "should bring clarity to the current legislation" after a prolonged period of uncertainty regarding crimes involving digital assets.

While many legal professionals welcome the move, some have raised concerns. Maria Bakakina, an adviser at Sokolov, Trusov, and Partners, questioned what legal mechanisms courts have previously used to seize cryptocurrency, citing a 2022 case where a St. Petersburg district court seized 24 crypto wallets allegedly containing stolen Ethereum.

Others emphasized the need to verify law enforcement agencies' technical readiness before passing the legislation. Daniil Markhiyev, managing partner at Daniil Markhiyev and Partners, stressed the importance of protecting innocent individuals, stating: "Guarantees are needed to protect the rights of law-abiding individuals [in crypto cases]."

Earlier this month, Federal Bailiff Service head Dmitry Aristov announced that his agency had developed new methods to convert seized Bitcoin into cash for the Russian Treasury.