EU bans high-value crypto services to Russia to close ‘loopholes’

8 Apr 2022

Image: © Feydzhet Shabanov/Stock.adobe.com

As well as a crackdown on crypto wallets, new sanctions include a full transaction ban and asset freeze on four Russian banks.

The EU has issued a fifth round of sanctions against Russia in relation to its invasion of Ukraine, which includes a ban on providing high-value crypto services to Russia in a bid to “close potential loopholes”.

Agreed today (8 April), the decision made by the European Council is a response to fears that Russians are circumventing existing sanctions by moving money abroad using crypto wallets.

Future Human

While EU-based crypto exchanges were already required to bar transactions from targeted individuals under sanctions, the latest move extends prohibition to deposits to crypto wallets.

In late March, European Central Bank chief Christine Lagarde said at an event that Russians were converting roubles into cryptocurrencies and stablecoins to evade harsh economic sanctions imposed by the EU.

“When you see the volumes of roubles into stable, into crypto, at the moment it is the highest level that we have seen since maybe 2021,” Bloomberg quoted her saying.

Concerns that Russians could use crypto to avoid sanctions have been around since the first sanctions were being imposed on the country by the EU, US and other nations.

At the beginning of March, the US Treasury warned against US-based exchanges facilitating “deceptive or structured transactions or dealings to circumvent any United States sanctions, including the use of digital currencies or assets or the use of physical assets”.

The fifth EU sanctions package against Russia also imposes a full transaction ban and asset freeze on four Russian banks – representing 23pc of the market share in the country’s banking sector – which are now totally cut off from EU markets.

It also prohibits trusts based in the EU from providing services and giving advice to wealthy Russians to prevent them from storing wealth in the bloc.

“These sanctions will further contribute to ramping up economic pressure on the Kremlin and cripple its ability to finance its invasion of Ukraine,” the European Commission wrote in a statement. “These measures are broader and sharper, so that they cut even deeper into the Russian economy.”

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com