Europe toughens its stance on crypto transactions linked to Russia

The European Union is about to take a major step in its economic war against Moscow. It plans to outright ban all crypto transactions involving Russian entities. A radical decision, but will it be enough to stop the machine?

Brussels strikes back against Moscow’s crypto evasion

It was the Financial Times that revealed the information on Tuesday. The European Union is working on a new sanctions package aimed at blocking any crypto transaction between its residents and Russian entities. The goal is straightforward: to deprive Moscow of a discreet but massive funding channel used to fuel its war effort in Ukraine.

In Brussels’ crosshairs are Russian crypto platforms that mimic already sanctioned exchanges. The EU calls them the “heirs” of Garantex — the Russian exchange banned last year. And the numbers are staggering. 

According to the blockchain analysis firm TRM Labs, Garantex, alongside the Iranian Nobitex, represented over 85% of financial flows to sanctioned entities and jurisdictions in 2024. The US OFAC had also established that most funds sent to Garantex came from exchanges linked to criminal activities.

Kyrgyzstan also enters the equation. Brussels plans to restrict the export of certain dual-use goods there. The document obtained by the Financial Times is unequivocal: since the start of the conflict, EU imports to Kyrgyzstan have jumped 800%, and Kyrgyz exports to Russia have increased by 1,200%. A bypass channel that Brussels now intends to close, and quickly.

A regulatory lock difficult to adopt

Legally, the path remains full of hurdles. EU proposals require the unanimity of the 27 member states. However, according to the Financial Times, three countries are already slowing the process. A blocked vote, and the entire mechanism grinds to a halt.

This potential blockage illustrates the political complexity of crypto regulation in Europe. Because while Brussels deliberates, bypass channels multiply. The case of the stablecoin A7A5 is the most striking example: according to the firm Elliptic, this discreet token allowed the transfer of more than 100 billion dollars through Russian wallets linked to sanctioned entities before Washington and the EU sanctioned it in turn.

The lesson is clear: reactive regulation is no longer enough. Each closed exchange is replaced by a successor, more opaque, more agile. This is precisely why experts call for a coordinated global framework to fill these regulatory gaps, rather than managing crises case by case.

The EU is trying to close a door that Moscow has exploited since day one of the conflict. But without political unanimity and international coordination, each ban risks being just a drop in the ocean. Because Bitcoin — and crypto as a whole — carries within its genes a natural resistance to control. And that is precisely what makes it so strong.