The EU prohibits against Russia the provision of ‘high-value crypto-asset services’ to the country

 

Cryptocurrencies are defined as digital representations of value that are not issued or guaranteed by a central bank or a public body, are not necessarily linked to a legally established currency and do not have legal tender status in any country, but are accepted by natural or legal persons as a means of payment for goods and services or for other purposes that can be transferred, stored and traded electronically.

 

The EU is convinced that some cryptocurrency companies provide Russian officials with access to digital assets that help circumvent sanctions. In addition, the EU believes that Russia is trying to spread its influence through technologies such as blockchain, which could be used for malicious purposes by Russian authorities. On that note EU prohibits against Russia the provision of ‘high-value crypto-asset services’ to the Kremlin ruled country.

 

The EU Council has added ‘high-value crypto asset services’ to the list of prohibited transactions in the European Union’s sanctions against Russia.

 

The European Union has added sanctions against Russia for the Ukraine 2022 war to its official journal. The sanctions prohibit the provision of ‘high-value crypto-asset services’ to citizens and organizations in Russia, as well as the transfer of funds through the financial systems of EU member countries. The sanctions apply to any person or entity involved in trade with certain Russian state-owned enterprises.

 

The updated list includes 32 people and 14 companies that have been affected by EU sanctions imposed over the Ukraine conflict. Six individuals and three companies were added to the list this month.

 

Earlier this year, there were reports that a number of Russian banks were discussing the possibility of using Ripple’s blockchain technology to make money transfers on behalf of clients who are subject to sanctions.

 

The Netherlands-based payments company Adyen is also reportedly under investigation for providing ‘high-value crypto-asset services’ to Russian clients through its joint venture with Sberbank.

The sanctions stemming from EU prohibits against Russia, transactions that violate the sovereignty and territorial integrity of Ukraine as well as provide financial support to individuals included in the sanctions list.

 

The EU Council document, published on February 17, adds two points to the list of activities that are prohibited in regards to Russia. In particular, it is now forbidden to issue or use high-value crypto-assets with a value of more than 1,000 euro for the above stated purposes. Also, the document mentions the prohibition of providing software for issuing tokens and smart contracts.

 

Among other things, the list of prohibitions now includes:

 

The provision of services related to “high-value” cryptocurrencies for residents of Crimea and Sevastopol;

 

Participation in financing any project related to the construction of pipelines in Crimea;

 

The provision of “high-value” crypto asset services for Russian officials from the General Department for Economic Security and Combatting Corruption (GUEBiPK) and the Main Directorate of Economic Security (GUEM), as well as deputies from local authorities.

 

The revised law also bans the provision of financial services to Russian companies that are involved in the construction of major pipelines. The EU is taking a tough stance against Russia as it is preparing to host the World Cup in 2022, while allegations of corruption and human rights violations have been made against Russia during preparations.

 

The European Union (EU) Council stated that it had expanded sanctions against Russia on Friday, prohibiting EU citizens and companies from providing services to Russia in connection with high-value cryptocurrency assets.

 

The statement says that this measure was taken to support the EU’s Ukraine sanctions regime. In addition, it has prohibited financial services related to the construction of major Russian gas pipelines such as Nord Stream 2 and TurkStream.

 

According to the statement, these sanctions will enter into force today and will be legally binding for all members of the organization.

 

In October 2020, Technical Director of Bitfinex Paolo Ardoino said that trading volume on Bitfinex rose sharply following new US sanctions against Nord Stream 2.

 

 

It is noteworthy that the term “high-value crypto assets” is not defined in this document.

The implementation of the second step of the EU sanctions against Russia in the framework of restrictive measures in connection with the situation in Ukraine have entered into force. The main points of this package are related to the ban on certain activities with high-value cryptoassets, as well as to a number of restrictions on the provision of services for their maintenance and use.

 

The Council of the European Union has included the Russian Federation in the list of countries to which it is prohibited to provide ‘high-value crypto-asset services’.

 

The list includes countries that do not cooperate with the EU in combating money laundering and terrorist financing:

 

Afghanistan, North Korea, Iran, Iraq, Syria, Uganda and Vanuatu.

 

In addition, it also includes jurisdictions that have a significant strategic deficiency in countering such risks.

 

Russia is on this list due to its “significant strategic deficiencies” in counteracting money laundering and terrorist financing.

 

The European Commission EC noted that Panama was also included in the list due to shortcomings

in its anti-money laundering framework. It added:

 

“In addition, Russia is included on this list due to deficiencies in its legal framework.”

 

The EC also reported that it had updated its list of third countries with strategic shortcomings, which was expanded by adding four more countries — including Trinidad and Tobago — last February.

The blacklisting of Russian officials and entities was first introduced in 2014, after Russia’s annexation of Crimea. Since then, the EU has added more names to the list, as well as imposing a prohibition on the sale of some goods and technology for military end-use purposes, and curbing access to capital markets for some of Russia’s largest financial institutions.

 

The restriction does not apply to transactions outside of Russian jurisdiction or to crypto exchanges or custodial wallets situated in non-EU states. It also does not apply if users can prove that they are citizens of countries outside the European Union.

 

The sanctions prohibit EU citizens from providing certain services to Russia. Those services are now defined as those that enable users to exchange cryptocurrency for fiat currency, or vice versa. The new measures have been incorporated into the EU Official Journal and came into force on October 29.

 

Its parliament voted today to pass the Digital Finance Package, which includes amendments to the Anti-Money Laundering Directive (AMLD), into law.

 

The package includes the EU’s 5th Anti-Money Laundering Directive, which requires member states to record cryptocurrency transactions involving exchanges between crypto assets and fiat currency, as well as exchanges between two different cryptocurrencies. The total value of these transactions must be above 10,000 euros ($11,500). The records will then be shared with other countries’ financial intelligence units.

 

In addition, it prohibits the provision of ‘high-value crypto-asset services’ to Russian nationals or entities based in Russia. These are defined as including:

 

exchanging crypto assets for fiat currencies;

 

transferring crypto assets from one user’s wallet to another;

 

exchanging one type of crypto asset for another;

 

issuing fiat currency or any other form of money in exchange for crypto assets; or

 

providing custodian wallet providers (essentially crypto asset storage services).

 

 

The new ban is part of a set of sanctions against Russia’s digital economy originally put in place in September 2019 for its alleged interference in the 2016 U.S. presidential election and annexing Crimea. Those sanctions also prohibit EU citizens from providing services related to internet surveillance technology to Russia. The latest round of sanctions was renewed on June 22, 2020.

 

The first round of these sanctions made it illegal for companies to provide certain types of technology and software to Russian security agencies and intelligence units, as well as banks that are under sanction by the U.S., Russia or other countries. These restrictions were expanded earlier this year when they were renewed in January 2020, but this latest round has added yet another restriction on crypto transactions with Russian companies and individuals.

 

Infact, The European Council has prohibited any entity or person in Europe from providing the following services:

 

the provision of registered accounts (or similar services) for the purpose of exchanging a virtual currency or cryptocurrency for fiat money, funds or other virtual currencies;

 

the exchange or transfer of virtual currency or cryptocurrency for fiat money, funds or other virtual currencies; and

 

the safekeeping and administration of virtual currency or cryptocurrency on behalf of other persons.

 

EU prohibits against Russia also applies to any entities owned by 50% or more by persons subject to these sanctions.

 

 

 

 

According to the report, the new ban prohibits EU citizens from providing services related to “high-value digital assets,” as well as prohibiting them from transferring funds for any purpose that could violate EU sanctions against Russia. The definition of “high-value” appears to be based on a price per unit, which would exclude small amounts like penny stocks and other low-priced cryptocurrencies like Shiba Inu (SHIB). The report added: “This includes transactions that are part of the activity of a company or individual subject to EU economic sanctions.” While the move was widely expected after the European Commission announced plans to enforce an asset freeze on Russians in early March, it comes at a time when Europe has struggled to find ways to punish Russia following allegations of Russian interference in the 2016 UEE presidential election and its alleged role in shooting down Malaysia Airlines Flight MH17.

 

 

 

The update also prohibits EU nationals and entities from making funds available to Russian individuals and entities listed on the sanctions list. The new rules do not apply to those residing in Russia.