Crypto: The EU hits hard against the Kremlin with radical economic sanctions

The European Union is not used to doing things by halves, especially when it comes to economic sanctions. This time, the objective is clear: to put pressure on the Kremlin by attacking its crypto infrastructure and its alternative financial means. This is a real blow to Russia, the repercussions of which could be felt well beyond European borders.

EU targets crypto-asset providers

The European Union's most recent sanctions directly target Eurozone operators who engage with crypto asset providers facilitating transactions in support of Russian defense.

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We are talking here about a total ban on these interactions, a drastic measure intended to cut off supplies to actors supporting the Kremlin war machine.

This decision marks a new stage in the economic war that the EU is waging against Russia. By banning these transactions, the EU hopes to dry up the financial flows that fuel Russian military capabilities. Crypto asset providers thus find themselves in the crosshairs, forced to comply or face severe consequences.

But that's not all. The new sanctions also include a ban on the use of SPFS, the financial message transfer system developed by Russia to circumvent the SWIFT exclusion.

The ban aims to further isolate Russia from international financial networks, further complicating its cross-border transactions.

Ban on Russian SPFS

The SPFS, designed as a Russian alternative to SWIFT, plays a crucial role in Russia's attempts to mitigate the impact of Western economic sanctions.

By prohibiting European entities from connecting to the SPFS, the EU is strengthening its grip around Russian financial transactions. This ban makes it more difficult for Moscow to use this system to support its military operations.

The Council of the EU has made it clear that this ban applies to all European operators. This includes those based inside and outside Russia. Even foreign subsidiaries of European companies must comply with this new regulation, under penalty of sanctions.

Indeed, these restrictive measures are added to a series of already severe sanctions imposed on Russia since the start of its invasion of Ukraine.

The disconnection of SWIFT and the seizure of billions of dollars of Russian funds in the West are some examples of actions aimed at weakening the Russian economy.

Putin's 'dark fleet' in the crosshairs

Russia has not given up its ambitions. Some tactics used to circumvent sanctions have been particularly ingenious. Among them is the use of “Putin’s dark fleet.” This is a fleet of tankers operating discreetly to continue exporting oil despite restrictions.

This fleet, accused of helping Russia circumvent sanctions, is now being targeted by the EU. By tracking and sanctioning these ships, the EU wants to make Russia's operations more difficult. It also seeks to reduce its oil revenues, a key source of funding for its war efforts.

The Council of the EU announced the identification of 27 ships forming part of this fleet. Indeed, these vessels will be subject to specific sanctions. Additionally, 61 new entities were added to the blacklist for their direct support of the Russian war effort. This illustrates an intensification of efforts to economically isolate Russia.

The European Union, through these radical economic sanctions, is sending a clear message. She is determined to use all means at her disposal to put pressure on the Kremlin and reduce its ability to wage war in Ukraine. The target is multiple: from crypto-asset providers to “dark fleet” tankers, including the SPFS system.

As Russia continues to look for ways to circumvent these sanctions, the effectiveness of these measures remains to be seen. What is certain is that the EU does not intend to ease the pressure any time soon. Each new initiative demonstrates its desire to strike hard and in a targeted manner.

The coming months will tell us whether these efforts will succeed in bending the Kremlin or whether Russia will find new ways to resist this economic offensive.

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