Russian Authorities Demand Access to Digital Wallets & Exchanges

One of the issues which Russian authorities have been unable to resolve pertains to disposing of seized digital assets. The issue is there because none of the authorities have access to digital wallets which is restricted by law.

Resultantly, they cannot liquidate digital assets which had been seized either as stolen funds or proceeds of crime.

Prosecutors Demand Granting of Access to Digital Wallets and Exchanges

Since Russian prosecutors cannot get rid of digital assets, hence, they are convinced of what they need in particular for addressing the issue.

They strongly believe that without accessing digital wallets and digital currency exchanges, they cannot dispose of digital assets in possession.

In this connection, they have raised the demand that they are allowed to access digital wallets as well as digital currency exchanges.

Prosecutors argue that with the access they can liquidate digital assets and sale proceeds could then be converted into fiats through exchanges.

This demand of the prosecutors was duly noted and later published by a Russian business daily newspaper called ‘Kommersant’.

PG Office’s Appeal

It isn’t the first time that this demand of granting access to digital wallets and exchanges has been raised by the prosecutors. In fact, the Office of the Prosecutor General had been raising such demands for a very long time.

Even at the event of the e-justice discussion held recently, PG Office raised this issue. The office explained that if digital assets have been acquired illegally as proceeds of crime, then they could also be seized like properties.

Similarly in a meeting, held under the auspices of the Russian Upper House’s Constitutional Legislation and State Building Committee, PG Office raised this issue again.

The person in charge of PG’s Office remarked in the meeting that judicial forums are passing conflicting judgments and orders.

The office further pointed out that in some decisions digital assets are regarded as “property” while in others they are treated otherwise.

Crypto Regulation in Russia

It is a fact that Russian judicial forums have been passing decisions based on a crypto law which in itself is not comprehensive. The relevant law is “Digital Financial Assets” which started to be implemented in 2021.

However, the law is denunciated by the experts’ majority as it fails to answer not only general but specific questions pertaining to crypto. Experts argue that the law in question is ambiguous and described limited scope.

In this regard, and in order to address the issues raised by law experts, Russian lawmakers have presented an amendment bill.

The said bill is currently pending discussion, debate, and approval by the Russian lower house i.e. State Duma.

Russia has been leaning towards the regulations of cryptocurrencies because the country wants to use them to circumvent the growing pressure of sanctions.

It is expected that the discussion on the bill will be carried out keeping in mind that they have to deal with global sanctions.

Therefore, that phrase may not take long to pass, followed by the debate phase, which will pass instantly.

Then comes the approval part, which may take time, as it will be based on other frameworks ensuring the regulations of crypto will be in order.

Seizure of Digital Assets under the Existing Law

It may however be noted that the relevant law, whose amendment bill is currently pending, describes a mechanism for the seizure of digital assets/wallets.

However, what the law does not provide is the post-seizure process i.e. what to do with the confiscated assets.

This is the grey area as a result of which though digital assets/wallets can be confiscated yet they can’t be liquidated.

PG Office further raised the issue that most of the local crypto exchanges are non-licensed entities and hence their services cannot be obtained.

On other hand, prosecutors cannot utilize the services of foreign crypto firms because they are restrained from engaging with foreign exchanges.

While raising the demand for access for themselves, prosecutors have also urged for granting the same access level to other government departments.

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