Regulation
Crypto Firms Must Scrutinize 2,200 Russian Entities Under Latest EU Sanctions – DL News
- EU officials have ordered financial companies not to provide services to the Russian military.
- Crypto service providers are prohibited from facilitating transactions related to the Russian war effort.
- The sanctions come as the industry faces an influx of new regulations.
European crypto companies need to worry more about Russia.
This is the result of action taken by the Council of the European Union on Monday adopted a fourteenth round of sanctions against Russia for invading Ukraine in 2022.
The sanctions package focuses mainly on industrial and financial ties with Vladimir Putin’s state. Bans EU ports from reselling Russian liquid natural gas.
European banks are also banned from connecting to the Russian financial transfer system.
Weapons supplies
As for cryptocurrencies, officials bar the platforms from facilitating transactions for any company or organization that helps Russia replenish its supplies of weapons and military technology.
The list of targeted entities now exceeds 2.200, Reuters reported.
“A lot of additional due diligence will be needed,” said Isabella Chase, senior policy advisor at blockchain intelligence firm TRM Labs DL News.
Crypto firms will need a solid understanding of which companies are involved in supporting the Russian military, he said.
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“You have to know about the weapons networks, and then you will also have to know about the non-EU cryptocurrency service providers who are facilitating that movement of funds.”
Although the sanctions package builds on the previous 13, it carries more weight because of the EU past new laws in May criminalizing violations of EU sanctions.
EU officials have already highlighted cryptocurrencies in the Russian sanctions regime since Putin illegally ordered his forces to take over Ukraine in February 2022.
Travel rule
The fifth EU sanctions package in April 2022 prohibited valuable crypto-asset services to Russia.
And in October 2022, the eighth round of sanctions prohibited all crypto services, wallets, accounts and crypto custody services, regardless of value.
The latest round comes as the European cryptocurrency industry prepares to comply with a slew of regulations on stablecoins, platform licensing and anti-money laundering.
The so-called Travel Rule, for example, requires crypto platforms to collect identifying information on senders and recipients of crypto transactions. The rule will take effect later this year, along with comprehensive regulation of cryptocurrency markets.
Then, the EU anti-money laundering regulation, which was recently published into law, it also tightens the provisions of crypto companies to prevent illicit financing.
“Companies are going through a massive increase in compliance where they will be working on broader anti-financial crime,” Chase said.
Inbar Preiss is a regulatory correspondent based in Brussels. Contact the author at inbar@dlnews.com.