Russian cryptocurrency payments are prohibited by the EU

Angelika Hellweger describes the EU’s ban on payments made in Russian cryptocurrencies in an article for the Rahman Ravelli Sanctions Monitor.

As the nation considered the best method to integrate cryptocurrency into its economy, the deputy finance minister of Russia, Alexie Moiseev, said last month that “there is no way to operate without cross-border transactions in cryptocurrency.”

Russia has said that it would permit all sectors of commerce to accept bitcoin and other cryptocurrencies. However, the most recent measures from the European Union (EU) aim to thwart such Russian intentions.

Only “high-value” crypto-asset services for Russians and organisations with Russian registration were targeted by the EU’s fifth package of sanctions measures earlier this year. These services were for digital holdings with a value greater than €10,000 in fiat currency (roughly US $11,000 at the time).

But it’s not yet apparent how much of an effect this prohibition will have. None of the top seven international crypto exchanges, including Bybit, Coinbase, FTX, Kraken, and Gate.io, which are popular with Russians, is a “European resident,” which would be required to follow the new regulations.

However, the EU retaliated with an eighth set of penalties in response to Russia’s declaration regarding cryptocurrencies and its contentious referendums in the Ukrainian provinces of Donetsk, Luhansk, Kherson, and Zaporizhzhia. In Russia, regardless of the amounts involved, the most recent package outlaws all bitcoin and cryptocurrency wallets, accounts, and custodial services. Additionally, it prohibits European cryptocurrency providers from providing services to Russian individuals or businesses unless they are citizens of the EU.

Additionally, because transactions on the blockchain might not be linked to a specific person, unlike many other, more traditional corporate services, enforcement operations may prove challenging.

Decentralized exchanges will still be accessible to Russian users in spite of EU bans. With the use of smart contracts, crypto assets are traded on these exchanges without the need for a centralised middleman. These exchanges are unable to regulate user transactions because they are unable to hold their users’ funds or crypto wallet passwords.

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• Russian cryptocurrency payments are prohibited by the EU
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