China Announces Sanctions on Two Lithuanian Banking Entities
On August 13, China's Ministry of Commerce announced sanctions against two Lithuanian banks, UAB Urbo Bankas and AB Mano Bankas, prohibiting Chinese institutions and individuals from conducting business with them.
This retaliatory measure was a direct response to the EU's July 18th decision to impose sanctions on two Chinese financial institutions. At the time, the EU accused the two Chinese banks of assisting Russia in circumventing sanctions through cryptocurrency services.
However, both Lithuanian banks sanctioned by China stated that the impact on their business in China was limited. The CEO of UAB Urbo Bankas stated that the bank had no business dealings with China, while AB Mano Bankas confirmed that the sanctions would not affect its daily operations. This suggests that Beijing has chosen targets with greater symbolic significance than actual economic impact.
Analysts point out that China's choice of Lithuanian banks for sanctions continues the diplomatic friction between the two countries that began in 2021. At that time, China downgraded its diplomatic relations with Lithuania due to Lithuania's permission to establish a representative office for Taiwan. The sanctions against the Bank of Lithuania have once again highlighted how cryptocurrency is becoming a new battleground in international financial warfare.
Currently, both sides are restricting financial institutions to exert pressure for policy change. Previously, Chinese banks faced similar sanctions from the United States for their involvement in Russian business. Some state-owned banks, threatened with secondary sanctions, tightened financing for Russian clients. This pattern of sanctions suggests that financial warfare may continue to spread across jurisdictions.
The European Commission stated that it is evaluating China's countermeasures and emphasized that it remains committed to resolving the issue through dialogue. China's Ministry of Commerce demanded that the EU immediately correct what it called "erroneous practices" and stop harming Chinese interests, claiming that the EU's initial sanctions violated international law.
This incident highlights the dual nature of cryptocurrency in the international economic system: it can be used as a tool to circumvent sanctions, but it also plays a key financial role in the new economic system.
As the Russia-Ukraine conflict continues, the cross-border flow of cryptocurrency has made it a new focus of competition among countries. This tug-of-war over cryptocurrency sanctions may prompt countries to accelerate the establishment of independent and controllable "sovereign firewalls" in the digital financial sector.