Tightening Sanctions Against Russian Nationals
The European Union (EU) has taken a significant step in its economic sanctions against Russia by prohibiting Russian nationals from owning or controlling cryptocurrency service providers. Announced on December 18, this measure is part of the EU’s twelfth package of restrictive measures to limit Russia’s ability to circumvent existing sanctions on crypto-related services.
Achievements and Challenges of EU Sanctions
The European Commission (EC) asserts that the new sanctions align with the EU’s goal of achieving a just and lasting peace. They highlight the sanctions’ impact on the Russian economy, citing the ruble’s depreciation and increased interest rates. However, the effectiveness of these sanctions is under scrutiny, with some EU leaders and critics pointing to potential circumvention by Russia, as indicated by growing trade figures for specific products. Economist Robin Brooks has notably accused Greek shipping oligarchs of undermining the G7’s oil price cap policy, prompting the EU to introduce new requirements for sharing price information in the Russian oil supply chain.
Blockchain in Diamond Traceability
Alongside the crypto service provider ban, the EU is taking measures to prevent Russian diamonds from entering the G7 market, effective January 1, 2024. To enforce this, diamonds must now be traceable “from the mine to the finger,” utilizing blockchain technology. This system mandates the registration of ‘digital twins’ of diamonds in their rough state, along with certificates of origin, which will be logged in a blockchain-based ledger.
EU’s Strategic Use of Blockchain in Sanctions
The EU’s incorporation of blockchain technology for diamond traceability exemplifies a strategic approach to enforcing sanctions. By leveraging blockchain’s transparency and security features, the EU aims to ensure the effectiveness of its measures against Russia. This innovative use of technology and the new restrictions on Russian ownership in crypto companies underscores the EU’s commitment to utilizing diverse tools and strategies in its geopolitical and economic efforts.