EU Weighs Blanket Ban on Crypto Transactions with Russia

The European Union (EU) is considering a plan to impose a comprehensive ban on virtual-asset (cryptocurrency) transactions with Russia. As concerns grow that Russia is using virtual assets to circumvent international economic sanctions, the bloc is moving to tighten regulation.

According to the Financial Times on the 10th (local time), the European Commission believes the Russian government and related institutions are using virtual assets as a means of sanctions evasion, and is discussing a proposal to include a broad range of Russia-linked virtual-asset services in its sanctions regime.

Items under review would cover not only virtual-asset service providers headquartered in Russia, but also overseas virtual-asset firms that were spun off from platforms based in Russia or otherwise have links to the country. Transactions related to the digital ruble issued by the Bank of Russia are also expected to be included in the ban.

The Commission has pointed to the difficulty of tracing and controlling virtual assets compared with the traditional financial system, arguing that a more comprehensive approach is needed to boost the effectiveness of sanctions. In particular, it is focusing on blocking the possibility of обход transactions routed through certain countries or platforms, given the borderless nature of virtual-asset transfers.

The measure has been proposed as part of the EU’s sanctions package against Russia, and would require unanimous approval from all member states to take effect. Differences in interests among member states and in views on virtual-asset regulation could prolong the talks.

The EU has previously imposed tough sanctions on Russia centered on banking, energy and trade, and expanding regulation into the virtual-asset space would be expected to further broaden the scope of restrictions.