The Russian government is taking another major step in regulating cryptocurrency. A new bill from the Ministry of Justice would legally classify digital currencies, like Bitcoin, as property—making them subject to seizure in criminal investigations. This move comes as crypto crimes continue to rise in the country, especially in connection with the dark web.

On May 19, Russian Deputy Minister of Justice Vadim Fedorov confirmed that the Ministry is working on a law that would give authorities the power to confiscate digital assets in criminal proceedings. This includes not only digital tokens but also physical hardware wallets and login details like seed phrases.

According to Fedorov, the new bill is part of a broader effort to tighten control over the use of cryptocurrencies in illegal activities. The Ministry plans to involve technical experts who will help ensure that seized assets can be stored safely and used as evidence in court.

Why Russia Wants to Seize Crypto

Cryptocurrencies like Bitcoin have long been attractive to criminals because they offer anonymity and are not controlled by a central authority. This makes them difficult to trace and even harder to confiscate compared to traditional assets like cash or jewelry.

“Digital currency cannot be physically seized and placed in a safe, as is the case with cash and valuables,” said Fedorov.

Russian officials say that criminals often use cryptocurrencies to sell illegal drugs and conduct other activities on darknet markets. One of the most concerning examples is Kraken, Russia’s largest dark web platform, which has seen crypto transactions jump 68% recently. Despite global crackdowns on such platforms, Russia’s underground market remains strong.

This isn’t the first time Russia has tried to regulate cryptocurrency use, but the new bill marks a significant shift. Instead of simply restricting crypto activity, the government now wants the legal power to seize assets it sees as linked to criminal behavior.

How the New Law Would Work

Under the proposed bill, courts could authorize the confiscation of digital currencies just like they do with other forms of property. This would include:

• Confiscation of physical wallets (USBs, hard drives, etc.)

• Collection of access credentials like private keys and seed phrases

• Legal restrictions on moving funds from wallets

• Potential freezes on blockchain addresses linked to suspects

This bill represents a rare moment where a government acknowledges the difficulty of handling crypto assets and actively builds a legal framework around them.

If passed, the law will allow police and investigators to freeze or seize crypto funds directly from users suspected of crimes. Experts would be brought in to securely manage the digital assets and ensure they’re not lost or tampered with during the legal process.

The Bigger Picture: Russia’s Push to Regulate Crypto

Russia’s crypto policy has been shifting in recent years. Initially skeptical, the government is now attempting to strike a balance between innovation and control. Authorities want to benefit from the blockchain revolution but keep it within state supervision.

In April, reports surfaced about Russia planning to introduce a government-backed crypto exchange meant for “super-qualified investors.” This move hinted that Russia isn’t planning to ban crypto outright but instead wants to bring it under state oversight.

Fedorov’s statement builds on that direction, showing that Russia sees crypto as a legitimate financial tool—but only if it’s regulated and not abused.

At the same time, there’s a growing effort to clean up the space. Hydra, another notorious Russian darknet market, was shut down in April 2022 through a joint international operation. But Kraken quickly took its place, proving just how persistent illegal activity in the crypto world can be.

Challenges Ahead: Can Crypto Really Be Confiscated?

Even with a legal framework, taking control of someone’s crypto isn’t simple. Unlike cash, which can be stored in a vault, digital assets are stored in blockchain wallets that require private keys for access. Without those keys, the funds are virtually impossible to retrieve.

That’s why the bill includes measures to collect seed phrases—unique combinations of words that unlock wallets. Law enforcement may need to rely on suspects to provide them, possibly under court order. However, there’s no guarantee that suspects will comply.

Also, seizing funds from decentralized platforms raises serious legal and technical questions. Since blockchain networks aren’t controlled by a single entity, freezing assets is not as straightforward as working with a bank.

Why This Matters for the Global Crypto Community

Russia’s decision could have ripple effects worldwide. If the law is passed, it may inspire other countries to take similar steps in recognizing crypto as property for legal purposes.

While some countries like the U.S. and the U.K. already treat crypto as taxable property, very few have built legal tools to directly seize digital currencies in criminal cases.

This could also lead to growing concerns about privacy and individual rights. Critics might argue that forcing people to hand over their crypto credentials could violate personal freedoms. Supporters, however, will point out that criminals shouldn’t be allowed to hide behind blockchain anonymity.

What Comes Next

The proposed bill is still in the drafting stage. It will need to go through several rounds of review before it can become law. Lawmakers will likely debate how to balance crime prevention with financial freedom. The Russian Ministry of Justice has said it will involve legal and tech experts in the process to ensure the rules are clear and enforceable.

Once implemented, the new law could reshape how Russia deals with crypto-related crime—and possibly influence how other nations tackle the issue in the future.

Conclusion

Russia’s latest move to classify Bitcoin and other digital currencies as property marks a significant turning point in crypto regulation. By giving courts the power to seize these assets, the Russian government is taking a firmer stance against the illegal use of blockchain technology.

While the proposed law raises questions about enforceability and privacy, it signals a growing trend: governments around the world are no longer ignoring crypto—they’re building the tools to control it.

Whether this leads to a safer digital economy or more restrictions on users remains to be seen. For now, crypto holders in Russia should pay close attention—because the way they store and use their digital coins may soon change dramatically.