EU considers banning all crypto transactions with Russia

The European Union (EU) is considering banning all crypto transactions with Russia to prevent Moscow from using digital assets to evade sanctions related to the Ukraine conflict, according to documents obtained by the Financial Times.

The EU aims to block “Russian crypto entities copying” that are separated from platforms previously sanctioned. These entities are believed to be supporting trading activities for Russia’s military operations. The new measure also seeks to prevent the emergence of “descendants” of the Garantex crypto exchange — a platform that has been on the EU sanctions list since last year.

Beyond Russia, Kyrgyzstan could also be affected. The EU proposes to ban the export of certain dual-use goods and accuses Kyrgyz companies of selling items such as electronic equipment used in drones and weapons to Russia. The documents indicate that high-priority imports from the EU to Kyrgyzstan have increased by nearly 800% since the outbreak of conflict, while exports from Kyrgyzstan to Russia have risen by 1,200%, highlighting a high risk of sanctions evasion.

Blockchain analysis firm TRM Labs states that Garantex — along with Iran’s Nobitex exchange — accounts for over 85% of the total flow of funds into sanctioned entities and regions in 2024. The U.S. has also imposed sanctions on Garantex and re-designated the platform last year. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) reports that most of the funds sent to Garantex originate from crypto exchanges involved in criminal activities.

The EU’s proposal requires unanimous approval from all 27 member countries to pass. However, according to the Financial Times, three countries are currently hesitant about this ban.