The commission said it has agreed to adopt the cryptocurrency resolution alongside new financial, export and energy-related measures. The digital asset prohibition applies to "high-value crypto-asset services to Russia," including deposits to cryptocurrency wallets.
The resolution addresses digital-asset wallets with more than €10,000 (about $11,000), and covers Russian residents and entities based in Russia, according to the text of the resolution.
"It shall be prohibited to provide crypto-asset wallet, account or custody services to Russian nationals or natural persons residing in Russia, or legal persons, entities or bodies established in Russia, if the total value of crypto-assets of the natural or legal person, entity or body per wallet, account or custody provider exceeds €10,000," the resolution said.
The commission said the measure is intended to help close loopholes in its sanctions regime.
While cryptocurrencies were already included in existing asset freezes leveled against Russian entities, digital assets could be a potential workaround for moving money outside the traditional financial system, an EU official told Law360 on Monday.
"The circumvention of the restriction on some banks to use SWIFT is theoretically possible via crypto-assets or by other means," the official said, adding that this means of evasion would likely be inefficient and slow.
"We are currently examining whether crypto assets could be used by Russia to circumvent any other measure we have introduced. At first sight, this might be more relevant for our restrictions on capital outflows from Russia," the official said.
The restrictions come amid concerns that sanctioned Russian individuals and entities might use digital assets to try to circumvent sanctions. U.S. lawmakers have pushed the executive branch and the cryptocurrency industry to ensure that digital assets aren't being used for that purpose, although U.S. Department of the Treasury Secretary Janet Yellen told House lawmakers on Wednesday that federal authorities haven't seen cryptocurrency being used for "significant evasion" of U.S. sanctions against Russia.
The EU official noted that if cryptocurrencies were used to evade sanctions, it would be relatively traceable once detected, and mass conversion of digital assets to cash would trigger anti-money-laundering rules.
"While sanctions evasion via cryptocurrencies is harder to detect in the first place, once detected it is very easy to investigate because crypto-transactions are fully traceable and it is practically impossible to alter that," the official said.
The EU's move runs counter to the public stance of several major cryptocurrency exchanges, including U.S. exchange Coinbase and global platform Binance, who have said they don't intend to voluntarily cut everyday Russian citizens off from their platforms. Both platforms, however, have emphasized their efforts to comply with sanctions rules. Representatives for the two platforms didn't immediately comment on the new ban on Friday.
The cryptocurrency measures were announced alongside a wide-ranging package of additional restrictions. Other finance-related restrictions include a full transaction ban and asset freeze on four Russian banks and a ban on advising wealthy Russian nationals about trusts.
The measures also prohibit many freight road operators from working in the EU and will bar Russian-flagged vessels from European ports. Export bans, estimated to be worth about €10 billion (nearly $11 billion), will include quantum computing, advanced semiconductors and jet fuel, while import bans will include cement, wood and rubber products and "spirits (including vodka)," per the announcement.
Notably, the sanctions do not extend to oil imports, only imports of Russian coal. The commission said it was working on "reducing our dependence on energy imports from Russia."
Representatives for the commission did not immediately respond Friday to a request for comment.
--Additional reporting by Jon Hill and Al Barbarino. Editing by Orlando Lorenzo.
Update: this story has been updated with additional information about the resolution and with comment from an EU official.
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