The EU intends to prohibit cryptocurrency transactions with Russia by closing all relevant channels, but some dispute if the move is genuinely enforced. The European Union is drafting a new set of penalties aimed at eliminating gaps that officials say have allowed Russia to utilise cryptocurrencies to get around existing prohibitions.

According to the Financial Times, the EU plans to “ban all cryptocurrency transactions with Russia” as part of its planned 20th sanctions package.

Unlike prior efforts to target Russia-linked organisations that emerged from sanctioned platforms, the present suggested penalties are broader in scope and aim to completely plug Russia’s crypto gap.

EU officials push for stricter controls to block Moscow’s digital asset routes

While the new sanctions package is still being finalised, it is anticipated to be implemented on February 24. European Commission President Ursula von der Leyen stated last week that the penalties would target 20 more Russian regional banks, as well as many institutions in third countries.

The EU has recommended sanctions against two Kyrgyz banks, Keremet and OJSC Capital Bank of Central Asia, as well as banks in Laos and Tajikistan, Reuters reported on Monday. If approved, the listed institutions will be restricted from transacting with EU citizens and businesses.

Sanctioned A7A5 Became One of the Largest Non-Dollar Stablecoins in 2025

According to the source, the measures may target Russia-linked payments platform A7 and its stablecoin A7A5, which is tethered to the currency. The operator has denied supporting sanctions evasion, calling such allegations politicised and unsubstantiated by evidence.

Despite repeated rounds of sanctions, A7A5 emerged as one of the fastest-growing non-dollar stablecoins in terms of market value by 2025, according to CoinMarketCap and DefiLlama data.

Some researchers, however, questioned the validity of the token’s reported activity.

Global Ledger, a blockchain analytics business, said it found patterns consistent with wash trading that could have inflated A7A5 volumes and mimicked demand. Global Ledger also questioned the EU’s ability to effectively restrict cryptocurrency transactions involving Russia.

Analysts Question EU’s Ability to Fully Enforce Crypto Sanctions

“The EU’s recent move to impose a blanket ban on Russian crypto activity—specifically targeting the A7A5 stablecoin—highlights a fundamental misunderstanding of decentralised liquidity,” Global Ledger co-founder and CEO Lex Fisun told Cointelegraph.

Fisun said the holders of tokens such as A7A5 can swap them into globally traded stablecoins through autonomous on-chain liquidity pools, without relying on centralised intermediaries that conduct compliance checks.

Once assets move through large global exchanges and liquidity hubs, transaction histories can become increasingly difficult to trace, he said, adding:

“At this stage, distinguishing these funds from legitimate market activity becomes a technical impossibility. For European exchanges to enforce such a ban, they would essentially have to block all flows from major global trading hubs, a move that would paralyse the legitimate crypto market.”

While sanctions may succeed in cutting Russian entities off from regulated European platforms, Fisun said decentralised infrastructure remains resistant to direct censorship, making a complete technical blockade unlikely.

The developments come as Russia advances domestic legislation on digital assets. On Tuesday, Russian lawmakers passed a law on its third reading establishing the procedure for freezing and confiscating digital currency.

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Disclaimer

This content is for informational purposes only and not financial advice. Crypto markets are risky, so always do your own research and invest only what you can afford to lose.