Russia Is Confiscating Crypto. The US, UK, And EU Already Built The Toolkit

On February 10, 2026, Russia’s State Duma passed a law creating a formal procedure to seize and confiscate cryptocurrency in criminal cases [1] The headlines were shocking, but the real story isn’t about Russia. It’s about a global trend that’s been accelerating for years.

While you were watching the markets, governments in the United States, United Kingdom, and European Union have been building the legal and technical infrastructure to seize your digital assets. This isn’t a far-off dystopian future. It’s happening now. And it works through the very systems you trust every day.

What Russia Just Changed

Russia’s new law, which is awaiting final approval, formally recognizes digital assets as property under criminal law [2]. This gives investigators a clear legal framework to:

• Seize digital currency and the devices that access it (like phones and hardware

wallets). 

• Transfer seized crypto to state-controlled wallets, where technically possible. 

• Freeze transactions via court order. 

• Compel crypto platforms to provide information.

However, legal experts point out critical gaps. The law provides no method for valuing volatile assets, no rules for storing them securely, and no clear path for cooperating with foreign exchanges, especially under sanctions  [2]. The entire process hinges on a crucial caveat: “if technically possible.” If an owner of a non-custodial wallet refuses to hand over their private keys, a forced transfer is impossible.

This is the real lesson from Russia’s move: custody is vulnerability. The new law isn’t about breaking cryptography; it’s about formalizing a process to target assets held by custodians or those they can compel to cooperate.

The US Seizure Playbook Is Already Here

The United States doesn’t need a new law. It has been using existing civil and criminal forfeiture statutes to seize cryptocurrency for years, with devastating effect. The Department of Justice (DOJ), FBI, and Secret Service have a well-oiled machine for taking digital assets.

Here’s how it works:

1. Investigation: Federal agencies use blockchain analysis tools like Chainalysis Reactor to trace illicit funds to exchange accounts or other custodial services [3].

2. Seizure Warrant: They obtain a seizure warrant from a judge, which is then served to the cryptocurrency exchange or custodian holding the assets.

3. Freezing and Transfer: The exchange, being a regulated business, complies with the warrant. They freeze the account and transfer the cryptocurrency to a government-controlled wallet.

This process is incredibly effective. In June 2025, the U.S. Secret Service announced its largest-ever crypto seizure, recovering over $225 million in funds from a sophisticated “pig butchering” investment scam. The funds were traced through a complex money laundering network and seized via civil forfeiture complaints [4].

In another massive case, the DOJ obtained legal title to over $400 million in assets tied to the Helix cryptocurrency mixer in January 2026. The operator had already pleaded guilty, and the government used criminal forfeiture to take control of the assets, which included a vast amount of cryptocurrency [5].

The practical reality is simple: if your coins are on a centralized exchange, they are in a legal jurisdiction. Your account can be frozen and your assets seized through a legal process you may not even be aware of until it’s too late.

The UK’s Expanded Toolkit

The United Kingdom has taken this a step further. The Economic Crime and Corporate Transparency Act, which came into effect in April 2024, gives UK law enforcement some of the most aggressive crypto seizure powers in the world [6].

Key provisions include:

• Seizure Without Arrest: Police can seize crypto based on “reasonable grounds to suspect criminal activity” before an arrest is even made. 

• Transfer to Law Enforcement Wallet: The law explicitly grants power to transfer crypto from unhosted (self-custody) wallets into a wallet controlled by law enforcement. 

• Crypto Wallet Freezing Orders (CWFOs): Authorities can get a court order to freeze a wallet held at a UK-based service provider for up to three years during an investigation. 

• Destruction of Cryptoassets: In a move that should alarm every crypto owner, the law allows for the destruction of seized crypto if it’s not “reasonably practical” to sell it, or if its circulation is deemed “contrary to the public interest.” This could target privacy-enhancing cryptocurrencies or assets associated with mixers [6].

This “destroy” provision is a gem most have missed. It means the government can decide certain types of crypto are too dangerous to exist and simply burn them, treating the market value as payment toward a confiscation order.

The EU Is Building Compliance Choke Points

The European Union’s approach is more subtle but just as powerful. Instead of direct seizure laws, the EU is building a network of compliance “choke points” designed to control the on-ramps and off-ramps of the crypto ecosystem.

The key regulations are the Markets in Crypto-Assets (MiCA) regulation and the updated Transfer of Funds Regulation (TFR), which fully implemented the FATF’s “Travel Rule” for crypto on December 30, 2024 [7].

Here’s what it means in practice:

• Self-Hosted Wallet Scrutiny: If you send or receive more than €1,000 from a self-hosted wallet to a Crypto-Asset Service Provider (CASP), the CASP must take “adequate measures” to verify you own and control that wallet [8]. 

• Mandatory Data Sharing: For every transaction, CASPs must collect and share originator and beneficiary information. Your personal data now “travels” with your crypto. 

• Enhanced Due Diligence: CASPs must perform enhanced due diligence on any non-EU-based crypto service they interact with, treating them as high-risk “correspondent relationships.”

This framework doesn’t require the government to crack your hardware wallet. It pressures the exchanges—the regulated, licensed businesses—to do the policing for them. By creating strict due diligence and reporting requirements around self-hosted wallets, the EU can effectively isolate your assets from the regulated financial system if you can’t or won’t prove ownership to their satisfaction.

Uncommon Talking Points You Need to Know

• Confiscation is a process, not a hack. It works through custodians, courts, and compliance choke points. 

• “Proof of ownership” for self-hosted wallets is a soft form of control. The government doesn’t need your keys if they can cut off your access to exchanges. 

• Stablecoin issuers have created “blacklistable money.” Companies like Tether can and do freeze assets at the request of law enforcement, creating a powerful on-chain control mechanism. 

• Exchanges are the easiest targets. They are regulated businesses with banking relationships and are vulnerable to legal pressure. 

• Privacy tools and mixers are first on the chopping block. They are consistently targeted in enforcement actions and are often the justification for broader surveillance.

What to Do Now

This isn’t a call to panic, but it is a call to be smart. The trend is clear: holding large amounts of crypto on centralized platforms is an invitation for risk. Here are practical steps you can take today.

1. Reduce Your Exchange Exposure. Exchanges are for trading, not for long-term storage. Keep only what you actively trade on them.

2. Use Self-Custody for Long-Term Holdings. Your keys, your crypto. It’s the only way to have true ownership.

3. Get a Hardware Wallet. For any significant amount of crypto, a hardware wallet is non-negotiable. It keeps your private keys offline and out of reach of hackers and remote seizures.

Ledger: Your Keys, Your Crypto

A Ledger hardware wallet is a physical device that stores your private keys in a secure, offline environment. It allows you to sign and verify transactions without ever exposing your keys to an internet-connected computer. If you are serious about protecting your assets, you need one.

Get a Ledger here

4. Consider Decentralized Perpetuals (DEX Perps) for Trading. Platforms like HYPERLIQUID and APEX allow you to trade from self-custody. Warning: This comes with its own set of risks, including smart contract risk and the operational risk of managing your own keys. It is not for beginners.

The Mindset Shift

The global regulatory landscape is shifting under our feet. Governments are no longer debating if they should regulate crypto, but how they can control it. The answer they’ve found is to target the centralized choke points and create a compliance regime that makes self-custody increasingly difficult to use with the traditional financial system.

The only rational response is to embrace the core principle of cryptocurrency: self- sovereignty. It’s time to move from being a passive holder to an active custodian of your own wealth.

This is not financial advice. This is educational content. Do your own research and manage your risk.

References

[1] Digital Watch Observatory. (2026, February 12). Crypto confiscation framework approved by State Duma.

[2] ForkLog. (2026, February 10 ). Experts Critique Russia’s New Cryptocurrency Seizure Rules.

[3] Chainalysis. (2025, March 26 ). Asset Seizure and Cryptocurrency.

[4] U.S. Secret Service. (2025, June 18 ). Largest Ever Seizure of Funds Related to Crypto Confidence Scams.

[5] U.S. Department of Justice. (2026, January 29 ). U.S. Obtains Legal Title to $400 Million in Assets Tied to Helix Cryptocurrency Mixer.

[6] GOV.UK. (2024, April 26 ). 004/2024: Economic Crime and Corporate Transparency Act – cryptoasset confiscation order provisions.

[7] Sumsub. (2025, March 11 ). Crypto Travel Rule Guide 2025.

[8] VASPnet. (2024, November 7 ). The EU’s due diligence requirements for CASPs.