A Russian court has delivered a massive win for crypto holders.

The Constitutional Court ruled that crypto is subject to property laws, which will have far-reaching consequences for crypto owners and courts, according to a legal expert.

Ignat Likhunov, a lawyer and the head of the law firm Cartesius, told Russian media outlet RBC that the decision will echo through future civil disputes and criminal cases involving stolen digital assets.

“It sets a precedent for future [police and court] investigations,” Likhunov said.

The ruling not only clarifies rules about ownership of digital assets, it also highlights the growing popularity of cryptocurrency in Russia, as Moscow prepares to make sweeping changes to crypto regulation later this year.

While federal lawmakers are still working on the new rules, courts must provide protection for crypto holders, provided that they have obtained the assets legally, Likhunov said.

Civil lawsuit

The high-profile case revolves around a civil lawsuit filed by Moscow resident Dmitry Timchenko. In 2023, Timchenko provided a loan of 1,000 USDT, the dollar-pegged stablecoin developed by Tether, to an unidentified borrower under pre-arranged terms.

However, the borrower allegedly failed to return the funds. Timchenko responded by filing a civil claim with the Savelovsky District Court. The court dismissed the case, ruling that Russia’s legislation on digital financial assets, Moscow’s take on tokenised assets, does not cover stablecoins.

Timchenko challenged this decision at both a regional appellate court and the Supreme Court, but both upheld the original ruling.

Undeterred, Timchenko’s legal team brought the matter before the Constitutional Court, asserting that the prior judgments violated his property rights as enshrined in the constitution. His lawyers argued that “no other form of property in Russia is subject to such limitations.”

Legislation incoming

In earlier criminal proceedings, Russian courts have recognised that laws on intangible property rights can be extended to cryptocurrencies such as Bitcoin and Ethereum.

“The [lower] courts rejected Timchenko’s claim because he failed to inform the tax authorities that he owned USDT tokens. [...] This entails a denial of judicial protection,” the Constitutional Court said in a statement.

The court noted that the obligation to report crypto holdings to tax bodies only applies to miners.

The ruling shows that failure to report coins does not negate a crypto owner’s property rights, said Likhunov — provided these tokens were not obtained through illegal means.

Tim Alper is a news correspondent at DL News. Got a tip? Email at tdalper@dlnews.com.