The European Union has confirmed a ban on providing crypto services to Russia. The Bloc has introduced the eighth set of economic and political measures as part of sanctions against Russia for invading Ukraine.
“The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet,” said the Bloc in a statement on Thursday.
EU has tightened a previous rule set in April that limited crypto payments to European wallets to $9,900 (10,000 Euros). The aim is to contain Russia’s revenues from trade with European entities to prevent them from illegally using the resources to fight Ukraine.
This follows Russia’s attempt to annex the regions of Donetsk, Kherson, Luhansk, and Zaporizhzhia in Ukraine. The measures are somewhat of a punishment for Russia’s continued escalation and illegal war against Ukraine, including its mobilization of more troops and open issuance of nuclear threats.
The new rule on Thursday forbids European crypto providers from offering services to Russian residents and entities unless they live in the Bloc.
From the looks of it, the previous 10,000 euros cap was not enough to curb payments from Russia.
“We realized that transactions were still going on on some scale, even after measures were imposed in April. We wanted to ensure that these services are not rendered anymore by EU operators,” said an EU official, who opted for anonymity.
According to him, the plans rely on whether or not other European jurisdictions choose to follow through.
“Switzerland, for instance, has followed all sanction measures. We count that it will happen here as well,” he added.
Other Russian Sanctions
Besides crypto-services, engineering, architecture, legal advisory, and IT consultancy services have been banned. These services cannot be offered to the Russian government or individuals as the country is highly dependent on them.
The new rule requires wallet providers to verify the identities of their users. Moreover, all entities offering crypto services in the EU would be required to publish a white paper with all the information about the project.
Can Russia Evade This?
Unlike traditional banking, Russia can rely on cryptocurrencies to get around the sanctions imposed by the EU. However, this will be difficult following the ban.
According to a report by Chainalysis in February 2022, many Russian individuals and groups have been involved in high-profile crypto-crime. Cybercriminal groups such as Evil Corp are some of the most prominent Russian organizations specializing in crypto-hacking attacks.
Often, many ransomware strains contain decrypted code files that cannot be encrypted if it detects the victim’s operating system is located in a CIS country. This is the Commonwealth of Independent States (CIS), an inter-governmental organization of former Soviet countries.
The report also showed that in 2021, nearly 74% of ransomware revenue worth more than $400 million in cryptocurrencies reached entities that are likely to be connected to Russia.
However, cryptocurrencies don’t guarantee Russia a sure way of avoiding sanctions. Due to their anonymous nature, crypto-related services are intensively monitored by regulators.