Across-the-board Ban on All Crypto Services to Russian Entities by Europe

In February, when Russia began its "special military operation" in Ukraine, the West immediately responded with severe penalties and expelled Russia from the SWIFT network.

The European Union has now said that it is increasing sanctions against Russians by forbidding cryptocurrency service providers and exchanges from doing business with Russian entities.

Russian economic isolation increases

There have already been eight sets of restrictions put in place by the EU in its ongoing campaign of sanctions against Russia.

These sanctions have been designed to cause as much economic harm to Russia as possible in order to hinder its ability to wage war.

The most recent prohibition, which sought to curtail some of the few means by which Russians had been able to maintain financial integration with the rest of the world, has since been scaled back.

It is in line with earlier laws that set a 10,000 euro limit on cryptocurrency payments to UK wallets.

Will the sanctions be effective?

Numerous attempts have been made in the past to ban the use of cryptocurrency, but they have virtually always failed.

The President of Nigeria in 2021 initially opposed the spread of Bitcoin in the nation because he believed it to be a danger to the national currency.

The use of Bitcoin in Nigeria has subsequently skyrocketed as a result of his realization of the significance of providing his people with a strong basis in a widely utilized currency with high liquidity that could not be diluted.

It is much more likely that Russians will simply be forced to less controlled platforms and in many cases will choose peer-to-peer alternatives like Local Bitcoins rather than fully prohibit transactions between willing participants.

As the competition for the Russian consumer base has reduced, they could also be pushed to Asian exchanges, where they will thereafter be able to dramatically grow their volumes.

Therefore, it is highly likely that these sanctions won't last indefinitely: in the short term, the ban may be used as a tool to try and weaken the Russian regime and crush morale at home, but in the long run, the ban would also be extremely harmful for the European Union, especially given that Russia's vast natural resources give the country a significant advantage when it comes to the Bitcoin mining industry.