As Russia prepares to regulate the crypto sector later this year, the European Union (EU) is considering implementing strict sanctions on all digital asset transactions linked to the country in order to combat sanctions evasion.
EU calls for sanctions on Russian crypto transactions
On Tuesday, the Financial Times (FT) reported that the European Commission (EC) is evaluating measures to ban all crypto transactions with Russia, stepping up efforts to crack down on the country’s use of digital assets to evade sanctions.
According to documents reviewed by the FT, the Commission appears to have proposed a broader ban “instead of attempting to ban copycat Russian crypto entities from already sanctioned platforms.”
“In order to ensure that the sanctions produce the intended effect, (the EU) prohibits collaborating with any crypto asset service provider or using any platform enabling the transfer and exchange of crypto assets established in Russia,” explains the internal document outlining the proposed sanctions.
The Commission argued that “any new registrations of individual crypto asset service providers… would therefore likely result in the creation of new providers to circumvent such registrations.”
Notably, the proposal would aim to prevent the growth of successors to Russia-linked crypto exchange Garantex. In 2022, the United States sanctioned the platform for “operating as an exchange of choice for cybercriminals.”
Additionally, the document targets payment platform A7, a company reportedly designed as a mechanism to facilitate cross-border trade due to sanctions imposed after Russia’s invasion of Ukraine, and its connected, ruble-pegged stablecoin A7A5, previously used by Garantex to transfer funds to the Kyrgyz exchange Grinex.
As Bitcoinist reports, the EU, UK and US have adopted restrictive measures against the payment platform. Despite this, recent reports revealed that the stablecoin had a global trading volume of $100 billion.
Additionally, the EC suggested adding 20 banks to the list of sanctioned entities and banning any digital transactions linked to the ruble. The Commission also proposed banning the export of certain dual-use goods to Kyrgyzstan, saying local companies had sold banned goods to Russia.
Still, imposing the measures would require unanimous support from member states, and three countries in the bloc are said to have expressed doubts, three diplomats briefed on the discussions told the FT.
The digital asset landscape in Russia
The potential crackdown comes as Russia continues to develop its next framework for digital assets. The CBR recently unveiled its comprehensive regulatory proposals to allow retail and qualified investors to purchase digital assets through licensed platforms in the country.
Last month, the State Duma Committee on State Construction and Legislation also introduced a draft law aimed at regulating the seizure of crypto assets in criminal proceedings and reducing the risks associated with the use of digital assets in criminal activities, including money laundering, corruption and terrorist financing.
Meanwhile, Russia’s largest bank by assets, Sberbank, recently announced that it was preparing to offer cryptocurrency-backed loans to corporate clients following strong corporate interest.
The bank said it is ready to work with the Central Bank of Russia (CBR) to develop regulations, and it is finalizing the infrastructure and procedures necessary for a possible expansion of cryptocurrency-backed loans.
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