We recently published a blog identifying issues which cryptocurrency pose in insolvencies; not least identifying and classifying it, how to take control of it and realising value for the insolvency estate.

Given cryptocurrencies are global, the question of how to classify cryptocurrency on insolvency is not limited to just one jurisdiction.

We consider a recent Court of Appeal decision and whether that helps clarifies the uncertain legal status of cryptocurrency in Russia.

What assets fall within the bankruptcy estate in Russia?

Bankruptcy estate is defined under Article 131(1) of Federal Law No. 127-FZ dated 26 October 2002 On Insolvency (Bankruptcy) (the “Bankruptcy Law”) and includes: all of the debtor’s property available at the time of opening the procedure and revealed during the bankruptcy proceedings.

It usually comprises (i) fixed and circulating assets; (ii) intangible assets; (iii) receivables; and (iv) other assets fixed in the balance sheets of the debtor.

The Bankruptcy Law also specifies some types of assets that do not fall within the categories of assets forming the bankruptcy estate.

Given the un-clear legal status of cryptocurrency in Russia, disputes can arise as to whether cryptocurrency forms part of the estate or not. If it does, it could be a valuable asset.

Clarification by the Court

In the recent Court of Appeal case no. А40-124668/2017 on bankruptcy of Mr. Tsarkov, the Court held that Russian laws do not provide for an exhaustive list of assets, property and non-property rights (“objects of civil rights”).

Taking into account the rapid level of development of information technologies, the Court applied a broad interpretation of the definition of “objects of civil rights” and found that the cryptocurrency in question did fall within the definition of bankruptcy estate.

The decision was the first and until now the only court ruling in Russia acknowledging cryptocurrency as an asset which can be included into the debtor’s bankruptcy estate.

On a practical note, the Court of Appeal also ordered the debtor to transfer the password to the financial manager of the debtor’s estate, to enable him to access the crypto-purse to replenish the bankruptcy estate.


As we commented in Insolvency and Restructuring International (IRI) – IBA section journal, the Court of Appeal made the important conclusion that the lack of special regulation of cryptocurrency does not exclude the applicability of general principles of civil laws.

We believe, however, that until laws on digital assets are modified and properly implemented, transactions with cryptocurrency in Russia will remain risky and their status in bankruptcy proceedings still remains unclear.