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How Putin's sanctions-hit Russian cryptocurrency users

Photo by Social Income / Unsplash

What is the present situation?

Following the Kremlin's annexation of some regions of Ukraine, which most of the international community has branded as a fraud, the EU has outlawed all cross-border cryptocurrency transactions between itself and the Russian Federation under the eighth sanctions package. Regardless of how much cryptocurrency any account, custodial service, or wallet has, they are all subject to the prohibition.

The P2P exchange LocalBitcoins (1), located in Finland, issued new penalties on October 7, 2022, limiting any activity by Russian individuals on its platform and lowering the exchange's monthly trading volume by at least 8% in October 2022. Russians with EU citizenship or permanent residency are exempt from LocalBitcoin's limitations. On October 8, 2022, LocalBitcoins allegedly sent an email to Dmitry Suharev, an editor for a Russian news website, informing him that he may withdraw all of his bitcoin from the service in a single transaction. He was informed that his account would subsequently be unavailable.

On October 14, 2022, allegedly called Daniil Chebykin, a Russian human rights group leader, informing him that he had around two weeks to withdraw his assets. Chebykin had been utilizing cryptocurrency to raise money for the group tasked with preventing the enlistment of Russian citizens in the conflict. For accounts connected to Russia, Dapper Labs halted trading without deleting the accounts.

How EU sanctions left Blockchain helpless

The business, which offers custodial and self-custodial wallets to 84 million cryptocurrency users worldwide, collaborates with Dapper Labs and the peer-to-peer exchange LocalBitcoins to enforce new sanctions (2) on Russia that will be put in place by the European Union on October 27th, 2022.

The new measures are in response to a Russian government decision that authorized international crypto payments. Prior sanctions had set a $9,700 cap on cryptocurrency transactions from Russian accounts to wallets owned by EU organizations.

Cryptocurrency companies  to soon abide by EU sanctions

Coinbase (3) and Binance (4) declared earlier this year that they would not support a blanket ban on Russian individuals. Instead, they would choose to block particular accounts with Russian connections. At the time of writing, neither Binance nor Coinbase had formally implemented the new punishment program.