- Russia is planning to seize crypto assets in bankruptcy cases.
- This is heralded as the enforcement mechanism of the digital age.
- The idea is the Ministry of Justice’s brainchild.
While the Russian central bank has maintained its zero-tolerance policy on the use of crypto assets in settlement and “accounting” scenarios, Moscow seems to have no issue liquidating the seized assets of financially constrained crypto-focused companies.
On November 22, a local media outlet reported that the Russian Ministry of Justice and Federal Bailiff Service (FSSP) are about to grant more authority to bailiffs to seize crypto assets in bankruptcy cases.
Russian Bailiffs to Seize Crypto and CBDC
According to the report, the Ministry of Justice’s latest enforcement mechanism entails granting bailiffs the authority to execute “foreclosure” on diverse digital holdings, including the digital ruble (CBDC), cryptocurrencies, tokenized assets, securities, and non-fungible tokens.
The Bailiffs will be equipped with modernized tools to “ensure a more effective response to legal obligations.” This includes using mobile phone geolocation services to track down debtors.
Another proposal of the initiative is to empower bailiffs to open an inquiry or conduct a preliminary investigation into crimes related to or identified during bankruptcy proceedings, a function that currently falls under the purview of the Ministry of Internal Affairs.
“Why not transfer this function to the FSSP of Russia as a government body that is responsible for the field of compulsory enforcement and has on its staff appropriately trained specialists?” a representative of the Ministry of Justice remarked.
But the enforcement doesn’t end with the bailiffs seizing the crypto. The Russian government is toying with an elaborate plan of offloading the confiscated digital assets.
Electronic Trading of Seized Crypto Assets
Ultimately, the Ministry of Justice plans to authorize the sale of seized digital assets through electronic trading. Under the initiative, bailiffs will likely be allowed to liquidate confiscated debtors’ digital holdings on cryptocurrency exchanges.
For this last step, discussions to create a state-owned crypto exchange are reportedly underway.
Read why Binance recently suspended Russian ruble deposits:
Binance Halts Russian Ruble Deposits Amid Western Sanctions
Stay updated on Russian military strong ties with crypto:
Crypto Makes Up $20M of Russian Military Fundraising Efforts: Report