The European Union imposed a ban on the maintenance of crypto-wallets of Russians

After the introduction of sanctions by the European Union in connection with a full-scale armed aggression against Ukraine, it became problematic to withdraw currency from Russia. One of the few workarounds for the Russians was the use of cryptocurrency. However, under the eighth package of sanctions in the EU a complete ban on the provision of cryptocurrency services to citizens and residents of Russia is introduced.

EU sanctions

The introduction of sanctions (restrictive measures) with regard to a certain country, entities or individuals is carried out by adopting Council Regulations (EU). In particular, on July 31, 2014 adopted Council Regulation (EU) No 833/2014 on restrictive measures in connection with Russia's actions to destabilize the situation in Ukraine (as a reaction to the annexation of the Crimean peninsula and the armed invasion of the territory of Donbass).

Then the Regulation did not contain any mention of cryptocurrency. However, after February 24, 2022, with the start of a full-scale war of the Russian Federation against Ukraine, more and more changes began to be made to Regulation No. 833/2014, reflecting the sanctions packages that were introduced in the EU.

Cryptocurrency restrictions

The first cryptocurrency restrictions for Russians were introduced under the fifth package of EU sanctions in April 2022. Council Regulation (EU) 2022/576 dated April 8, 2022, changes were made to Regulation No. 833/2014.

Specifically: in a document article 5b was added with paragraph 2 the following content: “It is forbidden to provide services for servicing wallets and accounts, as well as storing cryptocurrency for citizens of the Russian Federation, individuals - residents of Russia, legal entities, organizations and bodies established in Russia, if the total value of the cryptocurrency exceeds 10.000 euros.”

So, crypto-currency services for Russians in the EU have been significantly limited since April. In fact, any transactions of individuals, companies and institutions from Russia with a volume of more than 10.000 euros were subject to blocking.

The current ban

В press release the official EU government portal (which, by the way, can be read in Russian) talks about tightening measures - a ban on all wallets, accounts or services for storing cryptoassets, regardless of the amount.

At the legislative level, this is reflected in Council Regulation (EU) 2022/1904 dated October 6, 2022 amending Regulation No. 833/2014. After the changes article 5b with paragraph 2 as follows: “It is forbidden to provide services for servicing wallets, accounts, as well as storing cryptocurrency to citizens of the Russian Federation, individuals - residents of Russia, legal entities, organizations and bodies established in Russia.”

So, we are talking about a complete ban on the provision of services for servicing wallets, accounts and storing cryptocurrency (depository services) for Russian citizens and residents of the Russian Federation, regardless of the total value of crypto assets.

What's next? Since the ban applies only to those cryptocurrency service providers that are registered in European jurisdictions, it is possible that some crypto exchanges will change the jurisdiction of incorporation. Russian users themselves will be forced to move to Asian platforms. And we will keep a close eye on all this and tell you in the news.