Russian banks and crypto networks targeted

The EU has proposed a 21st package of sanctions against Russia over the war in Ukraine, which strongly targets the country's banks and crypto networks, as well as drone production, oil traders and refineries, EU foreign policy chief Kaja Kalas said today.

The new package envisages the sanctions list of 170 individuals and entities. Among them are nearly 90 banks, the most at once so far, which would bring the total number of banks under sanctions to over 100, or more than half of the 213 Russian creditors linked to the international financial system.

The banks will be subject to the full weight of EU sanctions, including asset freezes, travel bans and transaction bans. The package will be presented to EU ambassadors for negotiations on Wednesday. A unanimous decision is required to adopt the sanctions.

Western sanctions have already hit Russia's banking system hard, with its largest banks being excluded in 2022 from SWIFT, a secure global system for sending financial payment instructions.

However, Russian companies are now using a wide network of smaller creditors to circumvent sanctions and continue trading.

"We intend to deal a strong blow to the Russian financial sector, imposing asset freezes on nearly 90 banks and additional transaction bans on more than 30 banks in Russia and other third countries," Kalas said in a post on the X platform.

An EU diplomatic source, who spoke on condition of anonymity, said the aim was to weaken Russia's financial system and encourage Moscow to negotiate a peace deal with Ukraine.

Russia's economic growth slowed sharply to just one percent last year, from 4,9 percent in 2024, which officials attributed to high interest rates, Western sanctions and a strong currency.

The influential Russian think tank TsMAKP has repeatedly warned of an impending banking crisis, which the central bank denies.

"The banking crisis continues to unfold in a latent form - due to the concealment of the deterioration in asset quality through the restructuring of overdue loans, as well as the dominance of state-owned credit institutions," TsMAKP said in a May 10 note.

The deputy governor of the Russian Central Bank, Filipp Gabunia, said last week that the bank sees no signs of a banking crisis and that restructurings have stabilized.

The package provides for transaction bans for 35 banks, four of which are outside Russia, as well as for 11 crypto platforms that help Russia circumvent Western restrictions, including in third countries.

European Commission President Ursula von der Leyen said the package lays the groundwork for future stricter measures against crypto at the national level.

"... we will introduce the possibility of a complete ban on crypto-asset-related services for third countries. This will act as a strong deterrent for countries that host platforms that help Russia circumvent our sanctions," von der Leyen told reporters.

Kyrgyzstan was the first third country to be hit by the EU's anti-sanctions instrument, partly because of its role in Russian crypto-transactions. The 20th sanctions package banned the sale of metal-cutting machines and telecommunications equipment from the EU.

The commission proposes freezing the oil price cap at the current level for six months, to avoid Moscow profiting from the war in Iran.

The Commission proposes tightening restrictions on Russian liquefied natural gas (LNG), such as the resale of tankers; listing 30 more vessels from the Russian shadow fleet; and expanding the criteria for listing to include vessels involved in refueling sanctioned ships or unloading cargo.

The package also includes restrictions on fish imports for the first time, as well as restrictions on the import and export of high-performance metal alloys crucial for defense and aerospace.