The European Union introduced another round of economic sanctions on Russia and Belarus as the conflict with Ukraine escalated.
The European Union extended prohibitions on deposits to crypto wallets, to prevent possible sanction dodging through crypto. Moreover, Russian and Belarusian companies and individuals will also be banned from buying banknotes and transferrable securities, such as stocks, bonds, etc., denominated in currencies of EU countries.
European Union Restricts Crypto Services to Russia
The European Commission on Friday announced a fifth round of economic sanctions against Russia and Belarus due to increasing military aggression in Ukraine.
This time, the EU has targeted cryptocurrency transactions that were possibly used by Russian oligarchs and companies to evade sanctions. Crypto companies in Europe will be forced to restrict services to Russians and Belarusians, closing any potential loopholes.
Speaking on the measures needed to pressure the Russian government into de-escalating tensions, EU Foreign Policy Chief Josep Borrell said:
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“The aim of our sanctions is to stop the reckless, inhuman and aggressive behaviour of the Russian troops and make clear to the decision makers in the Kremlin that their illegal aggression comes at a heavy cost.”
In addition to tightening crypto sanctions, the EU has imposed a ban on Russian coal, a transaction ban and asset freeze on four Russian banks, a ban on Russian and Belarusian imports and exports to the EU countries, and has also excluded Russia from public contracts and European money.
Challenges in Preventing Crypto Exposure by Russia
Russian companies and oligarchs were criticized for using cryptocurrencies, including Bitcoin, to evade sanctions and fund the Russian military activities in Ukraine. Limiting the use of cryptocurrencies by Russia has become a challenge for countries, given the difficulty in effectively tracking crypto transactions. Despite the sanctions, Russia could explore crypto through non-compliant crypto exchanges and bitcoin mining.
Russia has recently shown interest in building infrastructure for bitcoin mining, as the country already has vast energy sources and a relatively cold climate. However, the country still lacks efficient infrastructure, and crypto mining is limited in Russia.
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