The European Union is cracking down on Russia’s use of digital currencies, taking a significant step by imposing comprehensive sanctions on Garantex, a Russian crypto exchange. This action is part of the EU’s sixteenth package of sanctions, designed to stop Russia from using digital assets to get around existing restrictions.

Garantex Now Under Full Sanctions

In a first, the EU Council is now applying its strongest level of sanctions to a Russian crypto exchange. Garantex, which has connections to Russian banks already facing EU sanctions, is now blocked from operating within the European financial system.

Garantex came under scrutiny for enabling transactions for individuals and groups already sanctioned, essentially becoming a crucial tool for Russia to bypass international restrictions.

As Russia deals with numerous economic penalties, digital assets have emerged as a way to move money internationally. These new sanctions are designed to close this potential escape route, stopping Russian financial networks from accessing global crypto markets through this means.

Garantex’s Role in Circumventing Sanctions

Garantex grew into a major platform in Russia, allowing people to convert rubles into digital currencies. This made it an appealing option for those wanting to move funds across borders, without using traditional banking.

Although Garantex claims to adhere to self-regulation, international regulators grew concerned about its involvement in transactions linked to sanctioned individuals and entities in Russia.

Garantex also operates cash exchange services both within and outside Russia, enabling users to exchange rubles for USDT (Tether). This has increased worries that the exchange might be facilitating financial activities that violate EU regulations.

Ripple Effects on the Global Crypto Market

With these new sanctions, Russia loses access to platforms like Garantex for financial transactions. This action is expected to have a significant impact on the global crypto market, which is already struggling with the recent economic downturn and persistent hacking incidents.

The crypto market, still in recovery mode, could experience further instability as these sanctions become more restrictive.