Due to new EU sanctions, Russians began to have their accounts blocked, and the same could happen on crypto exchanges. How to secure your funds?

EU residents are still subject to exceptions

In the 19th package of sanctions, the European Union banned the provision of payment and cryptocurrency services to citizens and residents of Russia and targeted cryptocurrency services created in Russia or for Russia. After this, Russians living in Europe complained about the massive blocking of accounts. “Vorstka” is looking into who will be affected by the new restrictions, who falls under the exception, and how to protect yourself from the loss of assets.

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Why does Revolut block the accounts of Russians?

In early November, clients of the neobank Revolut, popular among Russian emigrants, living in Europe on long-term national D visas or awaiting receipt or renewal of residence permits, began to receive letters about account freezing or account blocking. They were required to provide the bank with a current residence permit, and many were immediately notified that the contract with them was being terminated.

Currently, accounts are known to be blocked in at least 14 countries. The blocking also affected Russians with humanitarian visas, although Revolut had previously promised not to do this. The bank itself explains that this is due to sanctions restrictions that they are required to comply with.

It is not known exactly how many people were affected by the bank’s new restrictions; it is known that among the victims there are also citizens of Belarus. In its explanations, the bank refers to the new 19th package of EU sanctions against Russia. Russian citizens and residents, in particular, are prohibited from providing payment services unless they have a valid residence permit in the European Free Trade Association countries. National visas, including humanitarian ones, are not a residence permit.

Banks themselves are required to check clients for compliance with sanctions requirements, in this sense, Revolut’s reaction could be just the beginning - the neobank could respond to new EU rules faster than traditional financial institutions. In addition, bank clients are not the only ones who fall under the new sanctions; problems may also arise for clients of cryptocurrency services.

What cryptocurrency transactions has the European Union banned for Russians?

New sanctions prohibit the provision of any crypto services to citizens of Russia, companies located in it and its residents: sale and purchase of cryptocurrency on the exchange, storage of cryptocurrency, management of cryptocurrency assets.

These rules apply to all cryptocurrency companies operating in the European Union. Moreover, we can talk not only about exchanges, but also, for example, about banks with crypto services in applications (like the same Revolut).

And although the majority of Russian users work with exchanges registered outside the European Union, large platforms often have subsidiaries in the EU, DW notes . Such companies may choose to stop serving Russians to avoid the risk of being subject to sanctions. For example, the ByBit exchange has already done this. According to activist Gera Ugryumova, she stopped opening accounts for Russians even if they had a residence permit in EU countries ( Forklog also talks about similar cases).

ByBit sent some of its users who indicated a residence address in Europe a letter demanding they send documents confirming their residence in the EU. The exchange explains this by launching a new platform , Bybit.eu , for European users, who will be transferred to it from the existing Bybit.com platform.

Will Russian citizens living in Europe no longer be able to use cryptocurrency?

EU rules make exceptions for Russian citizens living in the territory of the union, Switzerland, Iceland, Liechtenstein or Norway with any long-term residence permit or also having citizenship of one of these countries. Long-term residence permits mean permanent residence and residence permits issued for study, family reunification, work, doing business, and providing asylum.

Russians who have the right to one of these residence permits, but who do not have the corresponding document in their hands find themselves in limbo - for example, with expired residence permits that are awaiting re-issuance due to bureaucratic queues. Many European banks freeze account transactions for Russians while they wait to receive new documents. Crypto exchanges will likely do the same.

How to reduce the risks of freezing crypto assets in Europe?

The general rule is not to store cryptocurrency in an exchange account unless you are using it for stock trading. Exchange accounts and custodial wallets, which must confirm the identity of clients, carry out decisions of the authorities - for example, freezing assets under sanctions or seizing them at the request of bailiffs or authorities. In addition, such services are subject to massive hacker attacks. Personal wallets may be less convenient, but they don't have many of these disadvantages.

All personal wallets are divided into two types: “hot”, existing in the form of applications for mobile devices or computers (as well as instant messengers, browsers and other complex applications), and “cold”, existing in the form of an offline physical medium with a memory card or hard drive inside.

What should I do if my assets are frozen?

If you are an EU resident, prove this to the bank or crypto exchange by sending them the relevant documents. If the residence permit is being renewed, this may take time - but some clients say that they were able to convince them to unfreeze their assets with the help of indirect documents - such as certificates from the Ministry of Internal Affairs and work contracts.

If you are not a resident of the EU, but a citizen of Russia, the situation gets worse - in this case, it is probably best not to wait for the blocking, but to urgently withdraw your funds outside the European jurisdiction. Be careful with Russian banks and services - they may be on sanctions lists, money will not be transferred there and may get stuck, if not forever, then certainly until the sanctions are lifted.

It is best for cryptocurrency owners to withdraw assets to non-custodial wallets. The sanctions regime will likely continue to tighten at least until a ceasefire in Ukraine .

Photo: Revolut card, Beata Zawrzel/NurPhoto

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