EU hits Russian exchange Garantex with sanctions in its 16th round

The European Union announced its 16th package of sanctions against Russia on Feb. 24. Among the new targets of the sanctions is the cryptocurrency exchange Garantex, which has already been under sanction by the United States for three years. 

The EU said in a statement that it was targeting actors responsible for circumventing previous sanctions, such as Garantex, due to its close association with EU-sanctioned Russian banks. Garantex has arrangements with sanctioned Russian banks to convert cryptocurrency to fiat and vice versa, thus enabling the uncontrolled transfer of funds into Russia.

Garantex says it’s not worried about the new sanction

This is the first time the EU has sanctioned a cryptocurrency exchange. Garantex communications director Evgenia Burova told Russian news agency RBC that the new sanctions are a “recognition of cryptocurrency’s role on the global financial market.” 

The EU has sanctioned over 2,400 individuals and entities. The sanction means that EU citizens and companies are forbidden to make assets available to the targeted entities. Nonetheless, the new sanctions will not impact the exchange or its users, Burova said. 

Blockchain analytical firm Chainalysis found in a report in September that U.S. sanctions on Garantex had had little effect on its operations. Other exchanges have seen declining activity after being sanctioned, and foreign cryptocurrency exchanges have largely abandoned the country.

The U.S. sanctions are much stricter, Burova said, and the exchange has already adapted to them. But while the United States accused Garantex of being “somehow connected with dubious transactions,” now the sanctions have been imposed for no other reason than the fact that the exchange is Russian.

The EU has imposed restrictions on Russian crypto users before. Since October 2022, the EU has prohibited cryptocurrency transactions with Russian citizens or entities and the provision of wallet services. 

According to a report released by Chainalysis on Feb. 19, sanctioned entities and jurisdictions received $15.8 billion in 2024, accounting for 39% of all illicit crypto transactions. 

Crypto is alive and well in Russia despite sanctions

There were over 100 Russian-language cryptocurrency exchanges servicing sanctioned Russian banks in 2024 with no Know Your Customer (KYC) checks. Many of them are small operations with no incorporation and registration information. The total value received by them has decreased steadily since 2022, indicating the success of international sanctions. The sum still approaches $1 billion, however.

Russia began using cryptocurrency for international trade at the end of 2024, and Finance Minister Anton Siluanov said there were plans to expand its use. It has also legalized crypto mining in certain areas and is also planning to introduce a digital ruble — a central bank digital currency — in July.

In light of the country’s previous hesitancy to adopt crypto, this is a tacit acknowledgment of the effectiveness of international sanctions and its faith in cryptocurrency’s capability to evade sanctions.

Russia ranks seventh for cryptocurrency adoption, according to Chainalysis. It is also the world’s second-largest crypto miner.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now