China sanctions two Lithuanian banks over EU crypto dispute

China sanctioned two Lithuanian banks this week, in response to European Union sanctions against Chinese lenders accused of providing crypto services to Russia.

On 13 August 2025, China's Ministry of Commerce ordered UAB Urbo Bankas and AB Mano Bankas to cease all activities in the People's Republic of China. The ministry also called on Chinese companies and citizens to avoid any financial transactions or other forms of cooperation with the two banks.

Clash with Lithuania

The measure came just over three weeks after the announcement on 18 July of the EU's 18th sanctions package against Russia, which also included measures against two Chinese banks. Brussels had accused the institutions of providing crypto services that could reduce the effectiveness of the sanctions already in place against Moscow.

Neither of the two Lithuanian banks has significant exposure to China. The CEO of UAB Urbo Bankas, Marius Arlauskas, told Bloomberg that his bank does not do business with Chinese entities, while AB Mano Bankas said it does not actively serve Chinese clients. Therefore, the ban is not expected to have a practical impact on their operations. Both institutions, rated as state-owned banks with low credit ratings, see the move mainly as a symbolic gesture.

Tensions between China and Lithuania have been high since Vilnius authorised Taiwan to open an office in the capital under the name 'Taiwan' instead of 'Taipei', as usually agreed for informal embassies. In 2023, Lithuania had also expelled three Chinese diplomats for "lack of proper accreditation".

The Chinese sanctions on Lithuanian banks seem to continue Beijing's economic pressure campaign, accompanied by a clear political message. China considers Taiwan a rebellious province and reacts with particular sensitivity to any political action that might appear to give it sovereign status.

EU reaction?

The European Commission said it would first analyse Beijing's move before taking any action. EU spokesman Olof Gill emphasised that Brussels remains open to 'mutually acceptable solutions' and will continue to engage in dialogue with Beijing.

In a note, the Chinese Ministry of Commerce called on the EU to correct its 'mistake' and accused the EU sanctions of violating international law and undermining fundamental principles of global trade. According to the ministry, Brussels' measures would have 'severely damaged' China's legitimate rights and interests.

The Crypto Corner

This 'eye-for-an-eye' dispute demonstrates how cryptocurrency-related services are becoming part of financial tensions between major powers. Cryptocurrency transactions have long been a focal point of sanctions, due to fears that they could be used to circumvent restrictions.

In the past, some Chinese state-owned banks, such as China Construction Bank, have also stopped lending to Russian customers, fearing secondary sanctions from the US. The latest escalation of sanctions suggests that both sides are extending this 'financial war' to an increasing number of jurisdictions.