EU 21st Sanctions Package: Cyprus Crypto and Russian Claims

07 Aug 2026

1. Introduction

This guide focuses on two changes of particular importance to Cyprus businesses. From 25 August 2026, the restriction on Russian ownership, control and governance roles in EU crypto businesses extends across all crypto-asset services defined by the Markets in Crypto-Assets Regulation (MiCA). The package also envisages protection for EU operators facing claims and decisions from Russian or other third-country courts in connection with sanctions-affected contracts. Qualifying Russian decisions must not be recognised, given effect or enforced in an EU Member State, while amended damages and protective-order provisions may offer further remedies.

2. Key takeaways

From 25 August 2026, Article 5b(2a) of Regulation 833/2014 extends to all MiCA-defined crypto-asset services.
The rule addresses ownership, control and governing-body roles. It does not govern customer access; Article 5b(2) separately prohibits the provision of crypto-asset services to specified customers.
For the relevant Article 5b prohibitions, an exclusion applies to EU, EEA and Swiss nationals and to holders of temporary or permanent residence permits in those jurisdictions.
Qualifying decisions connected with sanctions-affected contracts cannot be recognised, given effect or enforced in the EU.
EU operators may be able to recover damages and seek protective court orders, subject to the applicable conditions.

3. Which EU legal texts apply in Cyprus?

The principal directly applicable measures are Council Regulation (EU) 2026/1848, amending Regulation 833/2014, and Council Regulation (EU) 2026/1844, amending Regulation 269/2014.

Regulation 2026/1848 entered into force on 24 July 2026, although the expanded crypto rule applies from 25 August 2026. Regulation 2026/1844 entered into force on 23 July 2026. Both Regulations are directly applicable in Cyprus.

4. How does the expanded crypto governance restriction work?

Since 18 January 2024, covered Russian nationals and persons residing in Russia have been prohibited from directly or indirectly owning or controlling, or holding governing-body posts in, an EU provider of crypto-asset wallet, account or custody services. From 25 August 2026, Article 5b(2a) extends that prohibition to EU entities providing any other crypto-asset service defined by MiCA.

A Cyprus provider should review its shareholders, beneficial owners, directors and other governing-body members.

Article 5b(3) excludes EU, EEA and Swiss nationals and holders of temporary or permanent residence permits in those jurisdictions. Where an exclusion is relied on, the relevant evidence should be verified, kept current and retained. The exclusion does not override other applicable sanctions.

5. Can qualifying Russian judgments be enforced in Cyprus?

No. Where Article 11c of Regulation 269/2014 or Regulation 833/2014 applies, a Member State must not recognise, give effect to or enforce a qualifying injunction, order, relief, judgment or other court or administrative decision.

Article 11c covers qualifying Russian court or administrative decisions whether based on Articles 248.1 or 248.2, equivalent Russian legislation, or any other Russian law, provided that the decision satisfies the remaining conditions of Article 11c.

The rule does not erase the Russian decision or bind courts outside the EU.

6. Can EU operators recover losses from third-country claims?

Amended Article 11a of Regulations 833/2014 and 269/2014 may permit an EU national or Member State-incorporated entity to recover direct or indirect damages, including legal costs, caused by specified third-country court claims concerning sanctions-affected contracts or transactions. A central condition is that the claimant does not have effective access to remedies in the relevant third-country jurisdiction.

Depending on the applicable Regulation, recovery may be sought from the person or entity that brought the third-country claim and from persons or entities that own or control it. Recovery is not automatic: causation, access to remedies, the proposed defendants and available assets require case-specific assessment.

7. What protective court orders may be available?

Article 11ca of Regulation 833/2014, as amended by the 21st package, may provide earlier relief where specified persons bring Russian proceedings against a protected EU person in connection with a sanctions-affected contract or transaction. The provision covers proceedings brought in breach of an exclusive jurisdiction or arbitration clause, or abusively under Article 248.1 or Article 248.2 of the Arbitration Procedure Code of the Russian Federation or equivalent Russian legislation, or under any other Russian law, or in frustration of EU restrictive measures.

A competent Member State court may order the relevant person not to initiate, or to discontinue, the proceedings. A court may also order that person not to seek to enforce, recognise or rely upon, in any jurisdiction, any injunction, order, relief, judgment or other court decision obtained or potentially obtainable in those proceedings. Failure to comply can lead to financial penalties proportionate to the potential loss and payable to the protected applicant.

8. Frequently asked questions

Does the new rule prohibit all Russian nationals from using a Cyprus crypto provider?

Article 5b(2) separately prohibits the provision of crypto-asset services to Russian nationals, natural persons residing in Russia, and legal persons, entities or bodies established in Russia. Customer access must therefore be assessed separately from the governance restriction.

Can a Russian national with EU nationality or residence remain involved?

Article 5b(3) excludes nationals of an EU Member State, an EEA country or Switzerland, and holders of temporary or permanent residence permits in those jurisdictions.

Can a Russian judgment connected with a sanctions-affected contract be enforced in Cyprus?

It must not be recognised, given effect or enforced where it falls within Article 11c of Regulation 269/2014 or Regulation 833/2014. The statutory conditions must be assessed in each case.

Can legal costs incurred in third-country proceedings be recovered?

Potentially. Amended Article 11a expressly includes legal costs, subject to its conditions, including the absence of effective access to remedies in the relevant third-country jurisdiction.

9. Primary legal sources

The content of this article is valid as of the publication date mentioned above. It is intended to provide a general guide and does not constitute legal or professional advice, nor should be perceived as such. We strongly recommend that you seek professional advice before acting on any information provided.

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