EU Bans High Value Crypto Services to Russia Aimed at Closing Sanctions Loopholes

The European Union is taking further steps to sanction Russia following the invasion of Ukraine. Announced today, the EU has introduced a prohibition on “providing high-value crypto-asset services to Russia.” 

The prohibition forms part of the fifth package of restrictive measures announced by the EU against Russia since the invasion of Ukraine on February 24, 2022. 

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“The European Commission welcomes today’s agreement by the Council to adopt a fifth package of restrictive measures against Putin’s regime in response to its brutal aggression against Ukraine and its people,” a press release on the European Commission’s website reads. 

The EU’s new crypto-related prohibition will “contribute to closing potential loopholes,” per the press release. 

This package’s other financial restrictions include a “full transaction ban and asset freeze on four Russian banks, which are now totally cut off from the markets.” 

A prohibition has also been placed on providing financial advice to wealthy Russians to make it more difficult to store their wealth in the EU. 

Crypto and sanctions evasion

In the wake of Russia’s invasion of Ukraine earlier this year, several voices have raised concerns about Russia’s potential use of cryptocurrencies to evade economic sanctions. 

While cryptocurrencies cannot allow Russia—the nation-state—to entirely blunt the force of economic sanctions, some sanctioned Russian entities can pivot to crypto as an economic lifeline. 

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This can be done in multiple ways, including ransomware. In 2021, the ransomware industry generated more profit for Russian-affiliated criminals than any other group. A recent UN report also found that North Korea—which likely faces more sanctions than any other state in the world—part-financed its nuclear ambitions via cryptocurrencies.

Crane Hassold, former FBI agent and current Director of Threat Intelligence at cloud security firm Abnormal Security, previously told Decrypt that cryptocurrencies are the “primary factor” in today’s ransomware industry. 

Other methods include Bitcoin mining—an industry in Vladimir Putin’s good books—and the use of non-compliant crypto exchanges, a strategy for which there is already a precedent. 

In September last year, crypto exchange SUEX was sanctioned by the U.S. Treasury’s Office of Foreign Assets Control as an entity responsible for or complicit in cyber-related activity against American interests.

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