War in Ukraine: Russian Bitcoin countered by the EU

Europe is stepping up its embrace – L’European Union has just decided on a fifth package of punishments against Russia and Belarus. Among the various sectors concerned, we find the cryptocurrencies suspected of helping some Russians escape previous financial restrictions by the international community. Bitcoin finds itself sandwiched between the Ukrainian resistance that uses it to raise fundsthe Russian population seeking to protect itself against the decline of its currency and the oligarchs who would be tempted to get their money out via wallets cryptos. Let’s take stock of these new decisions in general and cryptos in particular.

Six sectors affected by EU sanctions

The European Union (EU) has therefore adopted a new sanctions package against Russia in an attempt to influence its position in Ukraine. The idea is to increase the pressure on the Russian economy in order to complicate the funding military operations. The detail of wrap can be found here but here are the main points:

  • ban on importing russian coal
  • prohibition of access of Russian ships to european portsexcept for certain goods – and a ban on Russian truckers operating in the EU
  • embargo on certain goods and strategic components of the industry (semiconductors, chemical components, etc.)
  • prohibition ofimport throughout the EU of certain Russian products (vodka, cement, wood, etc.)
  • exclusion of Russia European public procurement and cultural and academic programs
  • strengthening of financial penalties against natural and legal persons within the EU
  • total ban on financial transactions and freezing of the assets of four Russian banks as well as a ban on anyone giving financial advice to Russians wanting to take their money out of the country
Infographic of the new sanctions package against Russia – Source: Council of Europe Twitter

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Bitcoin and cryptos still cited by regulators

And cryptocurrencies were also mentioned in the financial section. In order to fill the potential gaps of the previous restriction packages, the EU wanted to clarify “a ban on supplying high-value crypto-asset services to Russia”. This decision follows the resounding declarations of the Russian Prime Minister last week. Mikhail Mishustin said Russians have nearly $130 billion worth of crypto on exchanges!

Difficult to verify this figure but whatever happens it is a sacred message sent to the rest of the world. And this brings water to the mill of critics cryptocurrencies that accuse them of facilitating capital flight out of Russia. Without any proof or study on this subject, some European officials continue to go after cryptos to supposedly handicap Moscow in its funding.

Economics is a highly disciplined discipline. Politics which, in times of conflict, becomes squarely part of military strategy. Financially weakening Vladimir Putin seems like a good idea, but the means to achieve it seem to us questionable to the extent that countries in Europe continue to import Russian gas and oil. Preventing crypto-asset services or turning off the gas tap, which of these two decisions do you think is the most restrictive for the Russian economy? We agree with you, especially since even the FBI does not believe in the Bitcoin solution to circumvent sanctions.

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