Russia is creating the legal infrastructure that will allow the government to accomplish the impossible, to confiscate bitcoin. The Russian Ministry of Internal Affairs together with other law enforcement agencies by the end of 2021 should develop proposals for the confiscation of cryptocurrencies and other digital assets according to RBC, a Russian financial news media.
The report quoted Alena Zelenovskaya, head of criminal and administrative law practice at NSA Amuleks, saying:
“The trend of a constant increase in the number of crimes using virtual assets, the insecurity of individuals from this type of criminal encroachment, of course, dictate the need to develop mechanisms for legal regulation and control over the circulation of virtual assets,”
With the increased demand for ransom in bitcoin, while hackers hack into users’ computers and systems of large companies often require them to be paid in cryptocurrency, thus a mechanism to confiscate these funds is needed adds the publication.
Cryptocurrency needs to be legalized before enforcing confiscation!
Russia has yet to regulate cryptocurrencies or at least some kind of legal recognition is needed from the legislative to justify a legal base to confiscate cryptocurrencies.
Cryptocurrencies are a grey area in Russia according to Konstantin Golikov, co-owner, and CEO of the Dailyrich.ru. In an interview for RBC, he said.
“In order to be confiscated, they must be recognized at the legislative level either as a commodity or a cash equivalent.”
“If law enforcement agencies begin to discuss the forfeiture of cryptocurrency, then, in fact, they are launching a mechanism for legalizing cryptocurrency in the territory of Russia. But, in my opinion, the Bank of Russia will seriously resist this.” Added Golikov.
Not your Keys Not your Coins
In theory, crypto can be confiscated from regulated exchanges that comply with law enforcements but when people hold crypto in their personal wallet it is impossible to confiscate it.
It is unclear how this confiscation mechanism will work. Maybe this initiative comes from a lack of understanding of how cryptocurrency works.
On the other side, recent reports say that Russia aims to control 20% of the bitcoin mining production from converting its metal factory in Karelia into a bitcoin mining facility.