Russia looks to legislation to help it tackle cryptocurrency-related crime

Russia has announced that it will introduce legislation to give law enforcement agencies the power to confiscate cryptocurrency that has been obtained illegally.

Addressing a conference in Saint Petersburg, Prosecutor General Igor Krasnov said that the use of cryptocurrency by criminals had become a serious issue for law enforcement. He stated that Russia’s criminal and penal codes are now set to be updated to enable law enforcement agencies to “apply restrictive measures and confiscation to the virtual assets”.

Krasnov has said that cryptocurrency is being increasingly used in bribery in Russia. The legislation that is being proposed is intended to tackle this.

Russia’s move to introduce legislation is one more indicator of the importance of cryptocurrency regulation. While cryptocurrency is a fast-paced sector that is developing rapidly it is clear that not all jurisdictions have the legal framework to deal with it.

It should be noted that a significant portion of cryptocurrency fraud arises from the Hydra market, which is a Russia-based dark web marketplace where cryptocurrency is used to buy and sell illicit goods online. Hydra has grown at an astonishing rate, with its volume of transactions having risen from approximately £9 million in 2016 to more than one billion pounds in 2020. Until now, cybercriminals involved with it have been free from scrutiny by law enforcement.

Eastern Europe is one of the areas with the highest levels of cryptocurrency transactions linked to criminal activity, which is largely due to Hydra. Russia’s efforts to legislate in the face of such a problem is understandable.