Russia Unveils Plan to Convert Seized Bitcoin into State Revenue

• ​Russian bailiffs have recently been granted the authority to convert confiscated Bitcoin from criminal activities into state revenue.
• The Russian government has seized millions in cryptocurrency from illicit activities, but existing laws lack clear guidelines on their management or allocation.

As nations increasingly integrate cryptocurrency into their financial systems, Russia, under Vladimir Putin’s leadership, appears to be taking a unique approach. Instead of holding Bitcoin as a reserve, the country is exploring ways to convert seized Bitcoin (BTC) into cash for state revenue.

Dmitry Aristov, head of Russia’s Federal Bailiff Service (FSSP), has called Bitcoin a “problematic asset” and urged lawmakers to regulate its confiscation and conversion into state funds. Speaking at a Federation Council Committee meeting, Aristov revealed that law enforcement agencies are working on mechanisms to seize and liquidate cryptocurrencies legally.

Aristov pointed to a recent criminal case as an example of how Bitcoin can be legally confiscated. During the meeting, a senator questioned how the FSSP manages confiscated digital currencies. Aristov responded: “We have a legal precedent from a criminal case. During the investigation, we confiscated Bitcoin tokens.” He further stressed that without formal legislation defining Bitcoin’s legal status, a comprehensive solution remains out of reach.

The Marat Tambiev Case

One of the most high-profile Bitcoin-related cases in Russia involves Marat Tambiev, a former employee of the Investigative Committee of the Russian Federation (ICRF). In October 2024, Tambiev was sentenced to 16 years in prison for accepting a bribe of 2,718 BTC (valued at approximately $258 million at the time) from the hacking group Infraud Organization.

Authorities discovered the Bitcoin stored on his computer and a Ledger Nano X hardware wallet during a search of his Moscow apartment. The court ordered the confiscation of 1,032 BTC (worth around $98 million), ruling that the assets were acquired as unconfirmed income. This case has intensified discussions about the need for a structured legal framework to handle digital assets obtained through illegal activities.

In response, Evgeny Masharov, a member of the Russian Civic Chamber, introduced a bill to the government proposing the creation of a government-controlled cryptocurrency fund designed to manage seized assets from criminal cases and generate revenue for social projects. However, the success of this initiative will depend on navigating the complexities of cryptocurrency regulation and addressing concerns from various stakeholders, including the central bank. 

Despite these regulatory hurdles, some Russian lawmakers see Bitcoin as a strategic asset rather than just a tool for law enforcement. In December 2024, Anton Tkachev, a Russian parliament deputy, proposed the creation of a strategic Bitcoin reserve to mitigate the financial impact of international sanctions and stabilize the ruble in an increasingly uncertain global financial environment. With Russia, along with the BRICS coalition, facing restrictions in traditional financial markets, Bitcoin could serve as an alternative for international trade, making the debate over its regulation and usage more crucial than ever.