EU restricts crypto services to tighten sanctions against Russia and Belarus

TL;DR Breakdown

• The European Union has imposed another round of economic sanctions on Russia and Belarus as the Ukraine crisis prevails.
• The EU has extended the sanctions to prevent possible sanction evasion through crypto wallets, as well as banning deposits to crypto wallets.
• Use of personal wallets dominated by currencies of EU nations such as the dollars or pounds, will also be prohibited.

According to a press release issued on Friday, the EU has expanded its sanctions against Russian oligarchs and officials, tightened control over cryptocurrency transfers, and targeted the maritime sector in response to Moscow’s war in Ukraine.

EU tightens sanctions and restricts crypto services to Russia

The European Commission announced the fifth round of economic sanctions against Russia and Belarus on Friday, owing to growing military aggression in Ukraine. The move comes as the EU attempts to put more pressure on Russia to de-escalate the situation in eastern Ukraine.

This time, the EU has levied fines against cryptocurrency transactions that it believes were used by Russian oligarchs and firms to avoid sanctions. Services from European crypto firms will be outrightly restricted to Russians and Belarusians, closing any potential escape routes.

EU Foreign Policy Chief Josep Borrell called for “dramatic and urgent” measures to press the Russian government into halting the war in Ukraine. He said the EU is attempting to prevent the Russian troops from engaging in irresponsible, inhumane, and aggressive behavior. He also emphasized that any unlawful activities carried out by the Russians in Kremlin would be met with serious ramifications.

In addition to the existing sanctions, the EU has now also banned transfers to and from cryptocurrency wallets registered in Russia and Belarus. The move is aimed at preventing Russians from evading sanctions by using cryptocurrencies.

Furthermore, the use of personal wallets dominated by currencies of EU nations such as dollars or pounds will also be prohibited. This is to prevent the use of these wallets for sanctions evasion.

The EU has also banned Russian coal, a transaction ban and asset freeze on four Russian banks, an embargo on Russian and Belarusian imports and exports to EU nations, as well as a ban on public contracts and European cash.

Russia’s sanctions on Cryptocurrency usage Faceoff

The new rules come as a response to Russia’s use of cryptocurrencies to evade sanctions and fund its military campaign in Ukraine. Executives from Russian firms and oligarchs have been criticized for using cryptocurrencies, such as Bitcoin, for avoiding sanctions. The use of cryptocurrencies in international trade has become a problem for nations due to the inherent difficulties in monitoring crypto transactions. Despite the economic penalties, Russia may look into cryptocurrencies in non-compliant crypto exchanges and could also obtain cryptocurrencies through mining.

Russia has recently opted to legitimize cryptocurrency trading and developed its digital ruble. President Vladimir Putin has also spoken about the potential use of cryptocurrencies in international trade. The country’s central bank has been testing the digital ruble for a while now, and it may launch the currency next year. It’s also been reported that Russia has expressed an interest in establishing infrastructure for bitcoin mining, owing to the fact that the country already has abundant energy resources and a chilly climate. The country, on the other hand, still lacks efficient infrastructure, and crypto mining is restricted in Russia.

However, with the recent announcement, it is evident that the EU is not going to tolerate any more of Russia’s antics and is willing to take strict measures to ensure compliance. This could set a precedent for forcefully taking active steps to put an end to it.

The new rules are a direct result of Russia’s continued aggression in Ukraine despite the previous economic sanctions. It is also a response to the Kremlin’s use of cryptocurrencies to avoid sanctions and fund its military campaign. The move will close any potential escape routes for Russian oligarchs and firms. It is also a way to put more pressure on the Russian government to de-escalate the situation in eastern Ukraine.