Cryptocurrency in Russia is banned. Is there any plan B?
The European Commission has agreed on the EU’s seventh package of sanctions against Russia. Among other measures, it contains new regulations on cryptocurrency. The EU fully prohibited crypto transactions for Russians on crypto exchanges.
The context
However, it is not the first time that Russians have been denied access to crypto exchange platforms. By early March, Coinbase blocked 25,000 cryptocurrency addresses identified as Russian accounts. At the time, the company stated that it suspected these addresses of “illegal activity” and placed them before Russia started a war in Ukraine. Also, Coinbase stated that they are committed to complying with international regulations. In addition, the European Commission issued a ban on supplying crypto asset services to Russia in April.
From October 6, Russian citizens and residents will no longer be able to open accounts or keep digital assets in the EU. To avoid jeopardizing their European licenses, the EU measures are likely to be adopted by US exchanges as well. As a result, the EU has reinforced the already imposed measures, which have been in place since April. The prohibition now applies to all quantities; before, Russian residents could not store more than 10,000 euros in their crypto wallets. Now it has changed:
“The existing prohibitions on crypto assets have been tightened by banning all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet (previously up to €10,000 was allowed).”
Bloomberg reports that another restrictive step might be to prohibit companies operating in the European Union from providing cryptocurrency wallets, accounts, and storage services to Russian residents and companies registered in Russia.
Russia legalizes cross-border crypto payments
Russian financial authorities have begun developing a framework to ease the use of cryptocurrencies for sanctions-related settlements with other countries. According to Deputy Finance Minister Alexei Moiseyev, the Ministry of Finance and the Bank of Russia have reconsidered their stance on cryptocurrencies. So they anticipate that cross-border payments in these currencies will be allowed soon. In addition, the Russian Central Bank and the Ministry of Finance have previously agreed on the bill.
The future of cryptocurrency in Russia
The Central Bank of Russia considered banning cryptocurrency at the beginning of 2022. However, the crypto-skeptical Russian CB stated that this development does not imply that crypto payments are legal in Russia. The restriction on cryptocurrency payments, which went into force last July, appears to still be in force. Cryptocurrencies continue to be a way for Russia to evade sanctions.
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