The US is poised to pass legislation that would allow it to seize part of the $300bn of Central Bank of Russia (CBR) reserves that were frozen by the West in the first week of the war between Russia and Ukraine.

US lawmakers are close to passing new laws that would allow Washington to appropriate the central banks money held in the US in an unprecedented move.

The central bank money of sanctioned countries held in the West is regularly frozen as sanctions come down, but technically it remains the property of the state and has always been eventually returned once sanctions are eased. Under Western property rights, the sanctioning power only has the right to seize this money – to take ownership of it – if it declares war on the sanctioned power. In the Ukraine conflict, the Western coalition has made it very clear from the outset that it wants to avoid a direct war with Russia at all costs.

The nominal peace between Russia and the West has introduced extremely difficult legal problems for seizing the cash, which US European partners fear will undermine the European financial system and trust in the euro.

However, as Western financial and military aid has become snarled in internal wrangling, since December the US has been aggressively pushing Europe to seize the CBR money. Russia only had some $5bn of CBR funds in the US at the time of the start of the war, but has an estimated $210bn in Europe, most of it in the Belgium-based Euroclear where it is invested in securities.

The White House has been pushing for support for legislation proposing a mechanism to seize its share of CBR funds, partly to set a precedent to make it easier for Europe to follow suit.

Bills have been introduced to Congress this week by both parties. The main focus is primarily on bills introduced by Representative Michael McCaul and Senator James Risch, which specifically target "sovereign assets", The Bell reports.

The White House's backing aligns with the McCaul-Risch proposal, which has garnered support from 62 House members and 14 senators across party lines, increasing its chances of approval. The political context is crucial, given the deadlock in Congress over a $61bn aid package for Ukraine, which has been blocked by Republicans.

Seizure of the CBR funds would negatively affect the dollar in the same way as it would the euro if Brussels seizes its share of the CBR funds, say experts.

Brussels has been very reluctant to seize the CBR’s money and is currently working on an alternative and much less ambitious plan to levy a 100% tax on the profits from the money invested via Euroclear that could generate up to $15bn a year that could be passed to Ukraine for its military and reconstruction needs.

But Belgium's position has been made more complex as it just took over the rotating EU presidency for six months. European government officials are working on various possibilities to transfer Russian assets to Kyiv but are moving very slowly. Germany, France, and Belgium in particular, where most frozen assets are located, are wary of their actual confiscation.

After the US announced on January 11 that it has sent Ukraine the last military supplies package and its Ukraine funding allocations are now completely exhausted, it seems increasingly likely that the US will seize the $5bn of Russian money it holds and continue to pressure the EU into following suit.