The State Will Be Able to Seize Cryptocurrencies and Rent Yachts

The new Proposal for the Regulation on the Management of Temporarily Seized Property, accepted at the Government session on September 11, enables the state to seize cryptocurrencies and rent out luxury vessels while proceedings are ongoing in which they have been temporarily seized.

Until now, the management of temporarily seized property was limited to storage and eventual sale, without specific solutions for virtual currencies or hard-to-liquidate assets such as luxury vessels. In practice, this meant that the property was kept under the supervision of the Ministry of Physical Planning, Construction and State Property or other competent authorities while the proceedings were ongoing, which was impractical and costly for certain types of assets.

Cryptocurrencies Under State Management

A more precise definition of virtual currencies, which includes cryptocurrencies, is among the most important changes compared to the previous Regulation from 2018, and the state will open its own digital wallet for their seizure.

According to the Ministry’s explanation, when it comes to managing this type of property, it is anticipated that cryptocurrencies, if technical conditions allow, will be transferred to a digital wallet opened for the Ministry.

– This transfer is only possible if the counterparty provides the necessary access data, and obtaining this data is the responsibility of the investigative bodies – the Ministry states.

This means that the state cannot independently access the access data, i.e., the keys for the digital wallet containing the cryptocurrencies, but must obtain them from the person from whom they were seized. If that person does not provide them, the police can obtain them as part of the criminal proceedings. The seized cryptocurrencies are then transferred to the state digital wallet and exchanged for euros, unless the person from whom they were seized files an objection within three days.

– If the objection is accepted, any potential loss in value is borne by the counterparty, while in the case of no objection, the exchange is executed at market price – the Ministry adds.

A Solution for High Storage Costs

According to the new proposal of the Regulation, the state will be able to rent out expensive or hard-to-liquidate assets such as, for example, yachts, instead of storing them. As explained by the Deputy Prime Minister and Minister of State Property Branko Bačić during the acceptance of the proposal, movable property can be ‘sold, given for use, or leased’. This is primarily intended for specific types of assets such as high-value vessels, the Ministry states.

– Such assets are difficult to liquidate due to limited demand, while simultaneously generating significant costs for storage, mooring, insurance, and maintenance. The Regulation clearly stipulates the criteria based on which a decision can be made regarding the leasing of property – they add.

As a concrete example from practice, they cite the case of a 27-meter vessel, estimated to be worth around 1.3 million euros.

– Due to the inability to engage a permanent crew, the vessel was regularly visited by officials from the Ministry and marina employees. The temporary measure was lifted after less than a year, as the counterparty settled the amount based on which the property was temporarily seized in agreement with the prosecutor. In such cases, the possibility of renting would be a more economically and logistically efficient solution – they explain.

Thus, renting will serve as a practical solution for the storage and use of property while the proceedings are ongoing.

As for real estate, the Ministry notes that they currently do not have any seized apartments or other properties that could potentially be put up for rent.

CERP Will Manage Companies

In addition to movable property and real estate, companies can also be temporarily seized, and in that case, the regulation provides for a special management model.

The new proposal of the Regulation stipulates that the Ministry can authorize the Center for Restructuring and Sale (CERP) to manage them on behalf of the state, and CERP will then operate under the same rules it uses for managing state companies. In that case, the state does not have to manage complex and large companies that have been temporarily seized itself, but can delegate this to CERP, which already has experience in this area.