[2021-07-09] Russia Drafting Law on Confiscation of Crypto Assets

[Slow death]

the most pathetic of all this is that these measures come from a country where the president wants to die in power, where the president does not want democracy, a country where there are corrupt people in power who will do anything to stay in power. this argument the russian government uses should feel ashamed before they think about telling this to the public, who are they protecting? people? they are definitely not protecting people, they just hate decentralization, freedom and democracy

[DapanasFruit]

Russia is preparing amendments to the current legislation to allow for the confiscation of crypto assets found to be proceeds from crime, Tass reported Wednesday.

The question is: how will they know if the cryptocurrency is a result of a crime? Basing on what I read here, this legislation is not actually banning the whole thing but aiding the prosecution of someone who committed a crime and is using cryptocurrency in doing so. But then again, since we are talking here of Russia where laws are not really respected and can be use to advance the agenda of those in power, this can be a sign to be cautious if one is involved with cryptocurrency. Better be careful than sorry.

[Sithara007]

Russia is like a mafia state run by Putin and his cronies. Private businesses are allowed to operate, only if they provide commissions to the ruling party members. And as far as you provide these commissions, you are allowed to do anything you want - drugs trafficking, extortion, sex slavery, hacking, manufacturing of counterfeits.etc. Once I thought that Putin was different from Boris Yeltsin and he cared about the ordinary Russian people. But I was wrong. He turned out to be even worse when compared to Yeltsin. The destruction of Russia was started by Yeltsin and Putin completed it.

[bbc.reporter]

@o_e_l_e_o. What the Russian government can do is hire a service similar to Chainalysis and blacklist certain addresses, warn exchanges of those addresses and follow those wallets’ transactions. I am not quite certain if exchanges are fearful of the Russian government enough to freeze accounts that have received transactions from blacklisted wallets, however.

How can they seize something they cannot see? That is my question!
If someone has, let's say 10 btc in cold storage and only him/her knows about that btc, how is any state with any perfect crypto bill, able to do anything about confiscating the assets?
Of course if you know somebody has got btc than you could force him/her to hand over the keys, but if there are no "visible" keys, what are they going to confiscate?

I do not know. We also do not know what the Russian government wants out of this proposed law. Do they want it be a law that would give them the authority to detain any suspect for a period of time for questioning? Whatever it may be, this clearly will be very dangerous law for users in Russia because how would they know if their utxos are clean or tainted? The Russian goverment themselves can taint your wallet and add it to their blacklist.

[o_e_l_e_o]

The question is: how will they know if the cryptocurrency is a result of a crime?

They'll do the same things that the US and Chinese governments and that all centralized exchanges are already doing: They'll either hire blockchain analysis companies or build their own blockchain analysis software, they'll track bitcoins which have come from darknet markets or passed through addresses which are known to belong to criminals or similar, and then they'll use the KYC details people submit to exchanges and other services or device fingerprinting or IP address or whatever to link those bitcoin transactions and addresses to real individuals. Whether or not that individual was actually involved in the crime or just received these "tainted" bitcoin in an honest transaction is probably irrelevant to the Russian government.

Time for Russian citizens to start mixing their coins and avoiding centralized exchanges if they don't already.

Whatever it may be, this clearly will be very dangerous law for users in Russia because how would they know if their utxos are clean or tainted? The Russian goverment themselves can taint your wallet and add it to their blacklist.

You keep your personal details private, you don't complete KYC, you don't link your wallets or addresses to your real identity, our operate through Tor, and you mix your coins. The government can't taint or seize your wallet if they don't know it exists. Although as I said previously in this thread, it is nearly impossible to be completely anonymous on the internet. You probably just need to be anonymous enough that you don't get caught in the mass surveillance programs. If you are specifically targeted, for example as a political dissident, then they will likely uncover your coins and wallets regardless of what you do.

[Woodie]

This is something I never thought I would ever see, imagine the Government confiscating crypto which is suppose to be personal property....what happens when you tell them you don't remember your key or password to the wallet what will they do, put you behind bars for a non criminal case....this is extreme to say the least. Shame to whoever is spearheading this agenda!

[Vishnu.Reang]

This is something I never thought I would ever see, imagine the Government confiscating crypto which is suppose to be personal property....what happens when you tell them you don't remember your key or password to the wallet what will they do, put you behind bars for a non criminal case....this is extreme to say the least. Shame to whoever is spearheading this agenda!

Well.. that's not how things work in Russia. If you don't "remember" the password to your wallet, then you will be in very big trouble. When they ask for your money, just give them and quit. Else really bad things may happen to you. Do you know what happened to Vasily Aleksanyan (former Yukos VP)? He was arrested in 2006 (at the age of 34), after Yukos refused a deal from the Russian government. While in prison, he contracted HIV and liver cancer. He died within less than 5 years. If this can happen to someone who is so famous, imagine what can happen to some ordinary person in Russia.

[amishmanish]

The news about possibility of bitcoin confiscation by a communist government must have rattled the people there. Doesn't the govt say that it is for preventing bribes? Basically if those in power decides to do something against you as an individual, there is little that can help you. It does not matter if you are in a country like Russia or in a free democracy. The example pointed by Vishnu are scary but similar stuff can happen in democracies if we are not vigilante enough. It doesn't take long for an autocratic leader and government to start talking about stuff like "limitations to freedom of speech" and "Sedition".

Soon enough, the tumble starts.

There is little anybody can do for the people who live under such regimes. They can only help themselves. Living in democracies can often make you unaware of the fact that the biggest land-masses like China and Russia have people living their lives under restrictions and limitations prescribed by those in power. There can be no yearning for the truth and the rise of creative thought to its highest limits. Everything you express can be used against you. Feel for the people there. Hope those rulers can somehow evolve.

[o_e_l_e_o]

what happens when you tell them you don't remember your key or password to the wallet what will they do

They will "help" you to remember.

Your only hope in any such scenario is that you are using multiple wallets and that you have managed to keep some of them hidden and unlinked (via blockchain analysis) to your other wallets. Whether these are entirely separate wallets using a different seed phrase, or wallets using additional passphrases but the same seed phrase (a popular method if you use hardware wallets), it's up to you. But the basic principle is that you have some wallets and coins you can hand over in the event of an attack/coercion, and you keep your other coins hidden and unknown to the attacker. You do need the coins you hand over to be enough to be plausible that they are all you have. Handing over a couple of wallets with 1 mBTC in them each is unlikely to satisfy the attacker.

[Ozero]

Russia is preparing amendments to the current legislation to allow for the confiscation of crypto assets found to be proceeds from crime, Tass reported Wednesday.

The question is: how will they know if the cryptocurrency is a result of a crime? Basing on what I read here, this legislation is not actually banning the whole thing but aiding the prosecution of someone who committed a crime and is using cryptocurrency in doing so. But then again, since we are talking here of Russia where laws are not really respected and can be use to advance the agenda of those in power, this can be a sign to be cautious if one is involved with cryptocurrency. Better be careful than sorry.

This decision will not be of great practical importance. These changes are of a formal nature and procedurally in the course of criminal proceedings decide the question of how to deal with cryptocurrency if it is associated with a crime and the known secret keys from wallets. I think that there will not be so many such cases, since it is quite difficult for the investigation and the court to obtain the secret keys from cryptocurrency wallets.
The positive side of this law is manifested in the fact that cryptocurrency is recognized as property and the norms of the civil code on the protection of the rights of cryptocurrency owners apply to it.

[bbc.reporter]

@xenon131. Are you from Russia? You might be the person to give us news updates. In any case, I speculate this proposed law might also include ensuring the traceablity of bitcoin and altcoin transactions by copying the European Union’s travel rule for cryptocoin transactions.

It might appear presently as fud, however, anything might be possible after witnessing China’s actions. The regulators around the world are becoming very aggressive against the cryptospace.



Companies that transfer bitcoin or other cryptoassets must collect details of senders and recipients to help authorities crack down on dirty money, EU policymakers proposed on Tuesday in the latest efforts to tighten regulation of the sector.

The law proposed by the European Commission, the EU executive, would apply what is known as the travel rule to crypto transactions to make them traceable.

Providing anonymous crypto-asset wallets will also be prohibited, just as anonymous bank accounts are already banned under EU anti-money laundering rules.

Source https://www.reuters.com/technology/eu-tighten-rules-cryptoasset-transfers-2021-07-20/

[o_e_l_e_o]

Providing anonymous crypto-asset wallets will also be prohibited, just as anonymous bank accounts are already banned under EU anti-money laundering rules.

So web wallets and centralized exchanges will have to enforce KYC on every user, but does this apply to self hosted wallets? Are they going to prohibit people from running Bitcoin Core or Electrum? Are they going to prohibit sites from even hosting the software? What about if I manually generate a private key and manually turn that in to an address? Is that illegal too?

What about hardware wallet sellers? Will they have to collect KYC and link it to a unique identifier in each device?

What complete nonsense. All they will actually achieve with these kinds of rules is to push more and more users to decentralized exchanges, mixers, and holding their coins in their own wallets.

[amishmanish]

Providing anonymous crypto-asset wallets will also be prohibited, just as anonymous bank accounts are already banned under EU anti-money laundering rules.

So web wallets and centralized exchanges will have to enforce KYC on every user, but does this apply to self hosted wallets? Are they going to prohibit people from running Bitcoin Core or Electrum? Are they going to prohibit sites from even hosting the software? What about if I manually generate a private key and manually turn that in to an address? Is that illegal too?

What about hardware wallet sellers? Will they have to collect KYC and link it to a unique identifier in each device?

What complete nonsense. All they will actually achieve with these kinds of rules is to push more and more users to decentralized exchanges, mixers, and holding their coins in their own wallets.

What they will achieve with these rules is that most of the people in bitcoin and crypto in general would be free to use it but will be easy to track for the sake of taxes. This is going to be the reality in the coming years and I doubt that too many people will make the shift to mixers and Dexes. Most who will do so are those who have significant holdings from being early investors or hodlers. Those people, if they exist, will anyways continue to be bulwarks of a potential struggle for privacy in the forthcoming future. Yet, it has been shown that when faced with legalities, most people will choose to take the easier route and comply rather than go rambo-mode. Like what Cobra had to do in removing the whitepaper in order to preserve his anonymity.

The government cannot stop anybody from using bitcoin and keeping it private but, unfortunately, they sure can stop everyone from using the world of crypto for fiat gains without being tracked and taxed.

[SFR10]

Companies that transfer bitcoin or other cryptoassets must collect details of senders and recipients to help authorities crack down on dirty money,

And that'll surely lead to "more" data breaches ^{[unfortunately]} when that ridiculous proposal becomes law in two years' time.

Providing anonymous crypto-asset wallets will also be prohibited,

By the look of things, in the next 5 years, they'll probably introduce a new system to handle our own transactions instead of us ^{[each time that we want to make a transaction, we'll be forced to call them and give them an in-depth explanation]}.
^{- That's probably what they want [SMH]!}

[o_e_l_e_o]

What they will achieve with these rules is that most of the people in bitcoin and crypto in general would be free to use it but will be easy to track for the sake of taxes.

Given that most people use centralized exchanges in which they have completed KYC, and centralized exchanges report to the IRS and are starting to report to other countries' tax agencies as well, then most people are going to be on the radar of their relevant tax agency anyway. I suppose if they can monitor individual wallets then it lets them keep track of tax on every individual buy, sell, trade, or exchange, as opposed to just ones conducted through said centralized exchanges.

Yet, it has been shown that when faced with legalities, most people will choose to take the easier route and comply rather than go rambo-mode.

I agree, but I would hope the government and various agencies monitoring every minutiae of your entire financial history, holdings, transactions, purchases, etc., would be enough to convince a few more people at least that they might want to start paying attention to their privacy.

The government cannot stop anybody from using bitcoin and keeping it private but, unfortunately, they sure can stop everyone from using the world of crypto for fiat gains without being tracked and taxed.

True, but also fine by me. I don't want fiat gains; I want to spend my bitcoin. I spend bitcoin for goods or services near enough every day, but I couldn't tell you the last time I sold any crypto for fiat.

[bbc.reporter]

Providing anonymous crypto-asset wallets will also be prohibited, just as anonymous bank accounts are already banned under EU anti-money laundering rules.

So web wallets and centralized exchanges will have to enforce KYC on every user, but does this apply to self hosted wallets? Are they going to prohibit people from running Bitcoin Core or Electrum? Are they going to prohibit sites from even hosting the software? What about if I manually generate a private key and manually turn that in to an address? Is that illegal too?

What about hardware wallet sellers? Will they have to collect KYC and link it to a unique identifier in each device?

What complete nonsense. All they will actually achieve with these kinds of rules is to push more and more users to decentralized exchanges, mixers, and holding their coins in their own wallets.

I am quite certain that the regulators will make exchanges require their users to use only one public key to transact with the exchange. This public key will be marked with your name on it upon KYC and shared with the government and other exchanges.

Also, users should be careful and make certain not to taint their KYC public key and coins if the travel rule pushes those users to decentralized exchanges and mixers.

[o_e_l_e_o]

I am quite certain that the regulators will make exchanges require their users to use only one public key to transact with the exchange. This public key will be marked with your name on it upon KYC and shared with the government and other exchanges.

Then send from that address to a brand new one, and then to a mixer. If anyone asks, you can say that brand new address was you selling the coins peer to peer, or spending them with a merchant, or gifting them to a friend, or donating to a charity, or whatever. Then after they've been mixed you can do what you like with them.

Also, users should be careful and make certain not to taint their KYC public key and coins if the travel rule pushes those users to decentralized exchanges and mixers.

Well, the obvious answer is to just not complete KYC In the first place. I have never completed KYC and never used a centralized exchange, and yet I'd bet that I buy, trade, spend, and use bitcoin more frequently than 90% of bitcoin users. It's not difficulty to avoid centralized entities once you get the hang of peer to peer exchanges.

[Miaallen]

There is no doubt that Russia is the greatest country when it comes to IT which is basically the bedrock upon which blockchain technology and Cryptocurrency operates. But I doubt they have the technology to clamp down on the use of cryptocurrency in their country most especially with lots of exchanges now providing peer to peer services.

[bbc.reporter]

I am quite certain that the regulators will make exchanges require their users to use only one public key to transact with the exchange. This public key will be marked with your name on it upon KYC and shared with the government and other exchanges.

Then send from that address to a brand new one, and then to a mixer. If anyone asks, you can say that brand new address was you selling the coins peer to peer, or spending them with a merchant, or gifting them to a friend, or donating to a charity, or whatever. Then after they've been mixed you can do what you like with them.

Also, users should be careful and make certain not to taint their KYC public key and coins if the travel rule pushes those users to decentralized exchanges and mixers.

Well, the obvious answer is to just not complete KYC In the first place. I have never completed KYC and never used a centralized exchange, and yet I'd bet that I buy, trade, spend, and use bitcoin more frequently than 90% of bitcoin users. It's not difficulty to avoid centralized entities once you get the hang of peer to peer exchanges.

However, you are risking for the exchange to freeze your account if they do not believe you or if they were really using Chainalysis. It might be better to keep your KYC coins separate.

Also, it is certainly easier to move small amounts of coins in the cryptospace. I reckon not completing KYC might be impossible for some traders who trade more than $10k daily.

[o_e_l_e_o]

However, you are risking for the exchange to freeze your account if they do not believe you or if they were really using Chainalysis. It might be better to keep your KYC coins separate.

That's not a bad idea either, but it becomes increasingly difficult to do and increasingly likely you will make a mistake as time goes on. You have to be very sure of your set up to regularly use two sets of coins and never link them even via blockchain evidence, let alone via using the same servers, block explorers, IP addresses, accounts, etc. You ideally need two separate computers on two different internet connections hosting two different sets of wallets, and to be absolutely sure you never send coins from both sets to the same account or service.

Also, it is certainly easier to move small amounts of coins in the cryptospace. I reckon not completing KYC might be impossible for some traders who trade more than $10k daily.

If you are a day trader, then KYC is pretty much unavoidable. Such is the price you pay for day trading. But given that if you are day trading then you are storing your coins on a centralized exchange the majority of the time, you have already completed KYC on that exchange and that exchange is already reporting your activities to your government, then you have little more to lose by also linking your withdrawal address to your KYC details.