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Cryptocurrencies have increasingly become a powerful tool in global finance and, as recent events show, a potential means to sidestep sanctions.
The European Union has unveiled its 19th round of sanctions against Russia, targeting key sectors that support it’s war in Ukraine, including digital currencies.
EU Targets A7A5 Stablecoin
The council notes that Russia has increasingly turned to cryptocurrency in circumventing sanctions. It notes that the Russian state-backed stablecoin A7A5 has become a key tool for financing activities supporting the war.
To tackle this, the EU’s latest sanctions target the developer of A7A5, its Kyrgyz issuer and the operator of a platform where large amounts of the coin are traded. On top of that, any transactions involving this stablecoins are now banned across the EU.
“We have just adopted our 19th package of sanctions. It targets Russian energy, banks, crypto exchanges, and entities in China, among others. The EU is also regulating the movements of Russian diplomats to counter attempts at destabilisation,” said Kaja Kallas, EU High Representative for Foreign Affairs and Security Policy.
Sanctions on Banks and Payment Systems
Further, at least eight banks and oil traders from Tajikistan, Kyrgyzstan, the UAE, and Hong Kong that circumvent EU sanctions are subject to a transaction ban.
Five Russian banks- Istina, Zemsky Bank, Commercial Bank Absolut Bank, MTS Bank, and Alfa-Bank are also hit with the same measures. In addition, four banks in Belarus and Kazakhstan face a transaction ban due to their links to Russian financial messaging and payment systems.
The EU is also banning its operators from engaging with Russia’s National Payment Card System (“Mir”) or the Fast Payments System (“SBP”). Further, strict limits are now in place on business with companies in nine Russian special economic zones, which are key hubs for industries supporting the war effort.
Earlier this month, reports showed that the ruble-backed A7A5 stablecoin had moved over $6 billion in cross-border transactions since August, even after U.S. sanctions targeted some of its operators.
Russia’s Move to Legalize Crypto
This comes as Russia is taking a major step toward embracing digital currencies as it is all set to legalize crypto for international trade.
The government believes that legalizing crypto and introducing oversight will help control a market that has so far operated loosely.
EU sanctions highlight the effort to curb Russia’s use of digital currencies to bypass sanctions. While Russia’s push to legalize crypto highlights how crucial these tools have become for cross-border trade.