As Russia plans to regulate the crypto sector later this year, the European Union (EU) is considering applying tougher sanctions on all digital asset transactions linked to the country to prevent sanctions evasion.
EU Wants Penalties on Russian Cryptocurrency
On Tuesday, the Financial Times (FT) reported that the European Commission (EC) is considering measures to ban all crypto transactions with Russia, strengthening its efforts to limit the country’s use of digital assets to avoid sanctions.
According to documents reviewed by the FT, the Commission appears to have proposed a broader ban “rather than trying to stop copycat Russian crypto organizations from platforms that are already permitted.”
“To ensure that the sanctions achieve the intended effect [the EU] prohibits dealing with any crypto asset service provider, or using any platform that allows the transfer and exchange of crypto assets established in Russia,” explained an internal document outlining the proposed sanctions.
The commission argued that “any listing of individual crypto asset service providers … would therefore likely result in the establishment of new ones to avoid those listings.”
Notably, the proposal is reportedly focused on preventing the growth of successors to the Russian-linked crypto exchange Garantex. In 2022, the US authorized the platform to “operate as a hacker exchange”.
In addition, the document is aimed at the payment platform A7, a company that was reportedly conceived as a way to facilitate cross-border transactions due to sanctions imposed after Russia invaded Ukraine, and its ruble-pegged stablecoin A7A5 previously linked, which Garantex used to transfer funds to the Kyrgyz exchange Greenex.
As reported by Bitcoinist, the EU, UK, and US have taken restrictive measures against the payment platform. Despite this, recent reports have revealed that the stablecoin has a total transaction volume of 100 billion.
In addition, the EC proposed to add 20 banks to the list of authorized entities and to ban any transactions related to digital rubles. The Commission has also proposed a ban on the export of certain dual-use goods to Kyrgyzstan, saying local companies have sold prohibited goods to Russia.
However, putting these measures in place will require unanimous support from member states, and three of the bloc’s countries have reportedly expressed reservations, three diplomats briefed on the talks told the FT.
Russia’s Digital Assets Landscape
The potential crackdown comes as Russia continues to develop its future digital assets framework. CBR recently presented its comprehensive regulatory proposals to enable retail and professional investors to purchase digital assets through licensed platforms in the country.
Last month, the State Duma Construction and Legislation Committee also advanced a bill to regulate the seizure of crypto-assets in criminal proceedings and to reduce 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 is preparing to offer crypto-backed loans to corporate clients following strong interest from the company.
The bank has confirmed that it is ready to work with the Central Bank of Russia (CBR) to develop regulations, and is finalizing the necessary infrastructure and procedures for a possible increase in crypto-backed lending.
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