The principal line: sovereign immunity against countermeasures
The argument is not about whether Europe can freeze Russian assets. It is about what the law permits after freezing — and in U.S. law, 'seize' is three different words: blocking, forfeiture, and immunity.
Part 1 established the ladder — freeze, use, take — and the EU’s implemented record: profits flowing to Ukraine, principal untouched. This essay is about the line between the second and third rungs, which I will call the principal line, because everything on one side of it is now practice and everything on the other side remains contested.
The legal tension, stated plainly
Two bodies of doctrine pull against each other.
Sovereign immunity — specifically execution immunity for central-bank reserves — exists to protect monetary stability and to prevent tit-for-tat seizures of state property. It is why central banks park reserves abroad at all: the deal, implicit in the system, is that reserves are not hostage to politics.
Countermeasures logic argues in the opposite direction: exceptional wrongdoing can justify otherwise-unlawful responses. But two things about countermeasures remain genuinely contested among scholars and governments: whether states not directly injured may take them (third-party countermeasures), and whether permanent confiscation — rather than reversible measures — can ever qualify. European Parliament research summarises a divergence, not a consensus.
The EU’s profits-only architecture is best read as a legal risk-management strategy: it extracts value while staying on the defensible side of the principal line. Whether that is a stable equilibrium or a staging step is, in my view, the single most important open question in financial statecraft — and I do not think anyone honestly knows the answer.
What “seizure” means in U.S. law — three different words
Public debate says “seize.” U.S. law does not have a single verb for that; it has a sequence, and each step has different requirements.
Blocking (sanctions law): Executive Order 13884 blocks Venezuelan government property under U.S. jurisdiction. Blocked property cannot move — but title does not change. This is immobilisation, rung one.
Forfeiture: converting blocked property into U.S.-owned principal normally runs through civil or criminal forfeiture — 18 U.S.C. § 981 for the civil route — with evidentiary standards, process, and judicial oversight. This is the domestic machinery for rung three, and it is asset-by-asset, not a policy announcement.
Immunity: where the owner is a foreign state or its central bank, the Foreign Sovereign Immunities Act intervenes — 28 U.S.C. § 1611 shields certain central-bank property from attachment and execution. Large-scale appropriation of a foreign sovereign’s assets would likely require a specific statutory pathway (the REPO Act played this role for Russian assets in the U.S. context) rather than existing forfeiture law alone.
One more piece completes the U.S. picture: the March 2025 executive order establishing a Strategic Bitcoin Reserve. Read precisely, it is an administrative structure for managing bitcoin the government already controls — overwhelmingly forfeited holdings — under a do-not-sell posture. It is a vault, not a warrant: it creates no new authority to take anyone’s assets, sovereign or otherwise. That distinction is routinely lost in commentary, and it matters for Part 3.
The stakes beyond the case
Why does the principal line hold? Not from tenderness toward Moscow. Custodial jurisdictions — Belgium, the EU, ultimately the dollar and euro systems themselves — are credible precisely because reserves parked there are treated as law-governed property rather than confiscable policy instruments. ECB policymakers and EU financial authorities have repeatedly warned that crossing the line could reprice that credibility: reserve managers watch, litigation follows (the Russian central bank’s ~$230bn Moscow suit against Euroclear is the live example), and the long-term cost lands on the infrastructure’s trustworthiness — the very chokepoint power that makes the tool work.
A practical guardrails test, for any proposed step past immobilisation: Is the legal basis clear and reviewable? Is the measure reversible or compensable under a settlement? Are third-party systemic risks — custodians, CSDs, balance sheets — contained? And are the incentives for fragmentation and substitution understood? Measures that fail the test do not merely risk illegality; they spend the system’s credibility to buy one round of leverage.
Part 3 moves the whole problem onto a different substrate — where the asset is not a ledger entry a court can reach, but a private key. There, as we will see, the interesting question is not what the law permits but what possession even means.
Sources
Council Regulation (EU) 2024/1469 · European Parliament study on immobilised assets (2025) · EO 13884 (Venezuela blocking) · 18 U.S.C. § 981 (civil forfeiture) · 28 U.S.C. § 1611 (FSIA execution immunity) · White House EO establishing the Strategic Bitcoin Reserve, 6 Mar 2025 · Reuters, EU indefinite-freeze dynamics, 12 Dec 2025 · Moscow Times on CBR damages claim · Companion concepts: Extraterritoriality, Weaponized Interdependence → This essay describes legal frameworks; it is analysis, not legal advice. Verified 30 Jul 2026.