Russia has increasingly relied on cryptocurrency channels to keep tech, military materiel, and hundreds of billions of dollars\u2019 worth of cash flowing across borders since wartime sanctions first hit. <\/p>\n
The European Union, after a slow start, has increasingly tried to disrupt them. <\/p>\n
Now, with recent measures targeting crypto actors in third countries, \u201cwe are definitely moving into a next phase of EU sanctions strategy when it comes to digital assets,\u201d said Isabella Chase, head of policy for Europe, the Middle East, and Africa at TRM Labs.<\/p>\n
Kharon reviewed and catalogued each of\u00a0the EU\u2019s crypto sanctions measures dating to their first appearance in a Russia package, four months into the war. Together, they\u00a0chart a\u00a0rapid evolution in the bloc\u2019s\u00a0crypto strategy\u00a0\u2014 from imposing limited and narrow crypto-trading restrictions to wider bans and sanctions targeting key exchanges<\/strong>, currencies<\/strong>, and the often-international infrastructure that prop\u00a0them all up<\/strong>.<\/p>\n It\u2019s \u201creally a story of both the [European] Commission growing in confidence and understanding the technology<\/strong> and how you can pull different sanctions levers to target different parts of it,\u201d Chase said, \u201cwhile simultaneously you see sanctioned actors themselves<\/strong> becoming more fluent in how <\/strong>they<\/strong> use crypto<\/strong>, and then also beginning to really share that playbook on what is effective and what works well among themselves.\u201d<\/p>\n It\u2019s \u201ccat-and-mouse, whack-a-mole,\u201d she added, \u201call the analogies we\u2019re forever using in crypto.\u201d<\/p>\n<\/li>\n<\/ul>\n Rewind: <\/strong>The onset of financial sanctions after Russia\u2019s full-scale invasion\u00a0incentivized it to identify and develop alternatives to the euro and dollar.\u00a0But despite warnings from policymakers about the potential back channels crypto could provide, they\u00a0didn\u2019t sprout up immediately.\u00a0<\/p>\n 2022 was \u201csuch a different time for digital assets to where we are now,\u201d Chase said.<\/p>\n The Russian side: <\/strong>The rise of the\u00a0A7 network<\/strong> and its A7A5 stablecoin,\u00a0designed\u00a0specifically to circumvent sanctions, was a game-changer.<\/p>\n Now, as The Brief has reported,\u00a0some\u00a0exchanges in and outside of Russia\u00a0openly offer to help Russians skirt sanctions<\/a>. And in a sign of\u00a0Russia\u2019s growing\u00a0reliance on crypto for cross-border transactions, legislators passed a law last month allowing Russians to \u201cbuy and sell major digital assets through Central Bank-regulated intermediaries,\u201d as the Moscow Times reported<\/a>. Meanwhile, domestic payments through crypto\u00a0remain banned.<\/p>\n The EU side: <\/strong>With some of its\u00a0crypto measures since the start of the war, the EU has lagged behind not only such Russian maneuvering but also other Western jurisdictions.\n<\/p>\n Yes, but:\u00a0<\/strong>The Union\u2019s eventual sanctions on Garantex\u00a0had a clear impact, Chase said, leading its $100-million-a-day crypto flows to \u201cdrop off almost immediately\u201d and shift to other high-risk exchanges. Chief among those was Grinex<\/strong>, an effective rebrand \u2014 which the U.S., U.K., EU, and others soon sanctioned as well.<\/p>\n \u201cIn [the crypto sanctions] world, that\u2019s kind of all you can hope for,\u201d Chase said. \u201cYou\u2019re trying to constrain activity and make it more expensive for sanctioned entities to wind down their operations and spin up new infrastructure.\u201d<\/p>\n The EU has gotten involved outside of sanctions of late, too: In March, Europol supported the U.S., Germany, and Finland in their seizure and takedown<\/a> of Garantex\u2019s primary online domain.<\/p>\n<\/li>\n<\/ul>\n The EU\u2019s latest:<\/strong><\/p>\n sanctions on four A7-related entities, including in Africa;<\/p>\n<\/li>\n transaction bans in April that targeted specific crypto service platforms in Belarus, Kyrgyzstan, Panama, and the UAE;<\/p>\n<\/li>\n\n
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