The EU Commission Will Isolate Russia From The International Transaction System

In a new attempt to force Russia to reconsider its invasion of Ukraine, the EU Commission decided to isolate the country financially. Leaders of several European countries, as well as the US and Canada, cut Russia off from SWIFT. But with the advent of cryptocurrencies, will such actions have the desired impact?

It has been five days since the Russian invasion of Ukraine started, and European countries have made a number of moves to show their disapproval without becoming directly involved with the war. As Russia continues to ignore the warnings, additional measures were deemed necessary. Consequently, the EU Commission has announced that it will remove numerous Russian banks from the SWIFT messaging system.

But it may not be enough.

In 2021, the Russian Central Bank expressed a desire to impose a blanket ban on crypto. However, Putin objected to this idea, seemingly predicting the financial restrictions about to squeeze his country. Wealthy and politically connected individuals and financial institutions in Russia may be able to circumvent sanctions to a considerable degree–turning to cryptocurrencies to bypass these impediments.

How will Cutting Russia off from SWIFT Affect the Country?

SWIFT, or Society for Worldwide Interbank Financial Telecommunication, is a network used by international banks and financial institutions to process global financial transactions. Preventing Russian banks from accessing SWIFT greatly restricts the country’s ability to participate in global financial markets.

The move was announced in a joint statement by several EU leaders, including those from France, Italy, Germany, Canada, and the USA. They all highlighted a shared interest in stopping Russia’s actions and forcing it to halt its invasion of Ukraine. The announcement reads that the EU Commission will “hold Russia to account and collectively ensure that the war is a strategic failure for Putin.”

Ursula von der Leyen, the president of the EU Commission, revealed five proactive measures taken against the country’s authorities. The first one was the removal of Russian banks from the SWIFT system, although it is unclear how many banks were removed at this time. But will SWIFT restrictions be truly disruptive for Russian banks? Many forward-thinking banks have already been shying away from outdated SWIFT systems, as they begin to build around blockchain technology.

Additional Measures Against Russia

Following the SWIFT measure, the EU Commission also decided to paralyze the Russian Central Bank’s assets and make it impossible for the bank to liquidate much of its capital. The Commission has also committed to limiting the sale of citizenships. Until now, wealthy Russians with ties to the country’s government were capable of becoming citizens of nearly any country, but this privilege has now been revoked.

Moving forward, the EU Commission intends to launch a transatlantic task force that will ensure that all sanctions against the country are adequately implemented. The primary focus will be on freezing the overseas assets of Russian officials. The goal is to turn up the pressure on Russian elites and their families–to influence the war from the inside.

Finally, the last measure calls for an increase in coordination against disinformation and other forms of so-called hybrid warfare. However, the effectiveness of this measure remains questionable, given that Russian billionaires could conceivably circumvent sanctions through stealthy use of crypto and blockchain tech.

Even with the transparency of blockchain wallets, large amounts of money can be moved quickly and immediately–with little means to stop the movement. The world may be able to “follow the crypto” after the fact, but it will be impossible to unwind the transactions that have already taken place.

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