Russia Proposes New Legislation Targeting Cryptocurrency Transfers through Third Parties
In a significant development regarding the regulation of cryptocurrency in Russia, the Investigative Committee of the Russian Federation has put forward proposals that could reshape the landscape of digital currency transactions. During an extended board meeting in early February, Chairman Alexander Bastrykin announced plans to legally recognize cryptocurrency as property, which would allow authorities to impose criminal liability for transferring electronic payment instruments through third parties.
Recognition of Cryptocurrency as Property
According to a report from the Russian news outlet Interfax, Bastrykin emphasized that recognizing cryptocurrency as property is meant to clarify the legal framework surrounding its handling during criminal investigations. If these proposed changes are enacted, laws would be established regarding the freezing and confiscation of cryptocurrencies, allowing law enforcement agencies to treat these digital assets as evidence in legal proceedings.
Currently, Russian law does not provide a standardized approach to dealing with cryptocurrencies in the context of criminal cases. However, the suggested amendments aim to formally classify cryptocurrencies as property, addressing gaps in their potential seizure and safeguarding during investigations.
Addressing the Role of ‘Droppers’
One of the key issues highlighted by the Investigative Committee is the use of third-party bank accounts—termed ‘droppers’—to facilitate cryptocurrency transactions. Bastrykin’s proposal seeks to impose criminal sanctions on those who transfer electronic payment instruments, which could include the unauthorized use of such accounts for crypto-related activities.
Vladimir Sobinsky, a legal expert at DRC Law Firm, explains that this scenario commonly occurs in Russia, where individuals looking to purchase cryptocurrencies must often rely on centralized exchanges or peer-to-peer platforms due to restrictions in direct purchases. This need forces many users to “buy access” to banking apps from other individuals, effectively using the services of a dropper.
Sobinsky notes that frequent transactions can lead to bank account closures under Federal Law 115-FL, pushing users to seek alternatives which often involve engaging third parties. He specifies that many droppers are young people or migrants, who sell access to their accounts for a fee ranging from 50,000 to 60,000 Russian rubles (approximately $500-$600).
Rising Digital Crimes
The Investigative Committee has reported a notable increase in digital crimes, with a 10% rise observed in 2024 compared to the previous year. Alarmingly, data suggests that nearly one in five of these offenses involved individuals under the age of majority. However, the committee has not clarified the extent to which these digital crimes are linked to cryptocurrency activities.
Legal Implications of the Proposed Changes
While the concept of imposing criminal liability for the transfer of electronic payment instruments is clear, the application of this regulation to cryptocurrency wallets remains uncertain. Sobinsky contends that crypto wallets do not typically qualify as electronic payment instruments, while another legal opinion from Nevsky IP Law posits that they should be included under this definition.
Ruslan Gafurov, partner at Nevsky IP Law, acknowledges that while cryptocurrency has been recognized as property in civil and tax contexts, the new proposals could clarify procedural issues associated with crypto in criminal law. He argues it is crucial to establish clear guidelines for the seizure and confiscation of cryptocurrencies as well as their presentation as evidence in court.
Conclusion
The proposed amendments from Russia’s Investigative Committee represent a significant step in the evolving discussion surrounding cryptocurrency regulation in the country. While the recognition of cryptocurrencies as property is not a new concept, the clarity and structure that these changes promise to bring to criminal investigations is seen as necessary by legal experts. With an increasing incidence of digital crimes, a clearer regulatory framework is essential for law enforcement to effectively address the challenges associated with cryptocurrency transactions. As the situation develops, stakeholders will closely monitor how these proposed changes could influence Russia’s cryptocurrency market.
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