EU opens door to country-wide crypto bans over Russia sanctions evasion

The European Union has expanded its Russia crypto sanctions to 14 foreign service platforms while creating a country-level transaction ban that could cut EU operators off from crypto providers in jurisdictions accused of repeatedly enabling sanctions evasion.
Summary

• The EU has imposed transaction bans on 14 foreign crypto platforms under its latest Russia sanctions package.
• New rules allow the EU to block crypto providers across countries that repeatedly fail to prevent Russia sanctions evasion.
• Restrictions on Russian and Belarusian ownership and control of EU crypto firms will expand from Aug. 25.
• No country has yet been placed under the new country level crypto transaction ban.

According to the Council of the European Union, the measures were adopted on July 23 under the bloc's 21st sanctions package against Russia, extending transaction bans to crypto platforms based in Georgia, Panama, the United Arab Emirates, the Marshall Islands, Kyrgyzstan and Belarus.

The package also added four designations connected to Russia's cross-border A7 payments network, including entities linked to its operations in Africa. EU officials said the network forms part of the financial infrastructure used to maintain payment channels despite restrictions imposed on Russia since its invasion of Ukraine.

More significantly, the package gives the EU authority to block transactions with crypto service providers across an entire third country if the Council determines that the jurisdiction has systematically failed to stop platforms from providing services that help Russia bypass sanctions.

The mechanism turns a measure proposed in June into an available sanctions tool. At the time, the European Commission proposed restrictions against 20 non-EU entities and sought authority to prohibit crypto services from jurisdictions hosting platforms used by sanctioned Russian actors.

EU crypto sanctions can now target entire countries

Under Article 5bc of amended Regulation (EU) No 833/2014, EU operators can be prohibited from dealing directly or indirectly with crypto-asset service providers or platforms enabling crypto exchanges or transfers when they are established in a listed third country.

A country can be added only when the Council determines that it has systematically and persistently failed to prevent crypto services or exchange and transfer platforms from facilitating activity covered by EU restrictions.

No country has yet been added to that list, according to economic sanctions specialist Nick Turner, meaning the provision currently gives the EU the legal mechanism without immediately imposing a nationwide crypto transaction ban on any jurisdiction.
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Turner described the measure as an important change in the EU's approach to secondary sanctions, which can place pressure on entities outside the bloc because of their dealings with sanctioned parties.

"Under the new Article 5bc, a country's regulators are on the hook for failing to stop EU-sanctioned activity," Turner wrote in his July 24 analysis.

The sanctions expert said the rule could create legal conflicts where domestic laws allow activity that EU sanctions require local authorities to prevent. In his assessment, the tool may initially be used to increase diplomatic pressure on governments hosting crypto businesses connected to sanctioned Russian activity.

Turner said it was "hard to say" whether the EU would ultimately place a country on the list, particularly because a nationwide designation would affect providers beyond the individual platforms accused of facilitating restricted transactions.

The authority had already been flagged when crypto.news covered the proposal in June. European Commission President Ursula von der Leyen said at the time that allowing country-level restrictions would serve as a deterrent for jurisdictions hosting platforms that help Russia evade EU sanctions.

Fourteen crypto platforms face direct transaction bans

Before any country-wide restrictions are used, the latest package has already imposed transaction bans on 14 crypto-related service platforms operating outside the EU.

The Council identified Georgia, Panama, the UAE, the Marshall Islands, Kyrgyzstan and Belarus as the jurisdictions hosting the affected platforms. The sanctions prevent EU operators from conducting covered transactions with the listed entities.

July coverage of the package showed that the crypto restrictions formed part of a much larger financial sanctions action involving 218 individual listings, including 48 people and 170 entities. The Council also imposed asset freezes and restrictions on making funds available to 94 banks and major financial institutions.

Another 33 Russian credit and financial institutions were placed under transaction bans, while four non-Russian banks were also targeted. The Council said one of the foreign banks was linked to Russia's System for Transfer of Financial Messages, or SPFS, while three others were accused of helping entities circumvent sanctions.

Crypto infrastructure received separate treatment through the 14 platform designations and the four additions connected with the A7 cross-border network.

The EU had already targeted the A7A5 ruble-backed stablecoin and entities behind it in its 19th sanctions package in October 2025. The asset has been associated with the A7 payments network, which Western authorities have scrutinized over its role in maintaining Russia-linked international payment channels.

The 21st package extends that pressure to new A7-linked entities, including connections with Africa, while allowing EU authorities to address platforms operating from countries where enforcement against sanctioned crypto activity is considered insufficient.

Russian and Belarusian control of EU crypto firms faces tighter rules

Separate provisions also expand restrictions on Russian and Belarusian involvement in crypto businesses operating inside the EU.

From Aug. 25, the prohibition covering ownership, control and management positions will apply across crypto-asset services described under the Markets in Crypto-Assets Regulation, extending the restrictions beyond wallet, account and custody providers.

The expanded scope covers MiCA-regulated services including crypto advice, portfolio management and transfers carried out on behalf of customers under the amended sanctions framework.

For Belarusian nationals and residents, separate July measures prohibit them from owning or controlling MiCA-regulated crypto-asset service providers or holding positions within their governing bodies from Aug. 25. The final package followed a June proposal and expanded the number of foreign crypto platforms facing transaction bans from 11 in the proposal to 14 when adopted.

The restrictions arrive shortly after MiCA's final EU-wide transition period expired on July 1, leaving crypto companies without the required authorization unable to continue providing covered services under their previous national registrations.

An Aug. 11 analysis of MiCA firms citing TRM Labs found that only 281 of 1,343 identified crypto service providers operating across the European Economic Area had secured authorization by the deadline, leaving 1,062 without approval.

TRM also found a difference in sanctions exposure between the groups. Unauthorized providers sent about $5 billion directly to sanctioned counterparties, roughly three times the $1.7 billion attributed to authorized firms, while 12% of unauthorized providers carried High or Severe risk ratings compared with 2% of authorized businesses.

Within that unauthorized group, exchanges accounted for 42% of providers, compared with 29% among authorized firms. TRM said every provider carrying its Severe risk classification was in the unauthorized group, while a small number of those firms sent between 1% and 12% of their transaction volume directly to illicit addresses.

The EU's Anti-Money Laundering Authority has asked supervisors to closely oversee customer exits and asset transfers as unauthorized providers leave the market, while coordinating with regulators in other jurisdictions when customers and funds move across borders.
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