Syed Rahman of financial crime specialists Rahman Ravelli considers the scale of the problem.

Russia has announced that it is set to pave the way for its law enforcement agencies to confiscate cryptocurrency that has been obtained illegally.

Prosecutor General Igor Krasnov has stated that Russia is in the process of introducing legislation that will give such powers to state authorities. Addressing a conference in Saint Petersburg, Krasnov said that the use of cryptocurrency by criminals had become a serious issue for law enforcement.

Last year saw Russia pass its first law regulating digital assets. 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," according to Krasnov.

Krasnov has stated that cryptocurrency is being increasingly used in bribery, which is making it difficult to authorities to follow the money trail. The proposed legislation will, when it is enacted, be used to tackle this.

While the precise details have not yet been revealed, Russia's move to introduce legislation is another indicator of the importance of cryptocurrency regulation. The cryptocurrency industry is a fast-paced one that is developing rapidly and not all jurisdictions have the legal framework to deal with it.

It should be remembered 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. Reports have suggested that its volume of transactions has risen from approximately £9 million in 2016 to $1.37 billion 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.

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