Ukraine may be missing out on at least $10 billion in stolen funds and lost tax revenue due to insufficient regulation of its crypto sector, according to a report by the Royal United Services Institute (RUSI), a UK-based security think tank.
Key Takeaways:
Ukraine could be losing over $10 billion due to weak crypto regulation and rising illicit activity.
RUSI warns that unchecked OTC markets and money mule networks are exploiting wartime vulnerabilities.
Ukraine must align with EU and FATF standards by 2025 or risk further financial and regulatory setbacks.
The report, released this week, paints a stark picture of Ukraine’s crypto landscape, where over-the-counter (OTC) markets, illicit finance, and wartime vulnerabilities have turned the country into a growing hub for money laundering and cyber-enabled crime.
RUSI Warns Ukraine Risks Further Financial Exploitation Without Crypto Reforms
RUSI warns that without urgent regulatory reforms, Ukraine could see its financial system further exploited, while continuing to lose vital tax income.
“Ukraine-specific risks are primarily connected with the OTC activities in the country, its role as a threat hub, and the role of crypto in funding procurement of sanctioned components for the Russian military,” the report states.
Despite adopting a Law on Virtual Assets in early 2022, just days before the Russian invasion, Ukraine has yet to implement the legislation due to the absence of a corresponding tax bill.
Under its EU accession roadmap, Ukraine must align its crypto rules with EU standards by the end of 2025.
Failure to comply could see the country’s status downgraded by the Financial Action Task Force (FATF), further complicating its fight against financial crime.
The report also highlights how domestic criminal networks, such as “money mule” schemes, are costing the country an estimated $24 million each month.
These networks exploit vulnerable citizens, offering as little as $120 to launder money through their bank accounts.
Telegram-based drug trafficking operations paid in crypto and attempts to target Ukrainian soldiers were also flagged as serious concerns.
RUSI calls on Ukraine to narrow its crypto focus to strategic assets like stablecoins, adopt clearer rules to separate legitimate businesses from illicit actors, and streamline its regulatory framework to prevent overreach and corruption.
Russian-Linked Crypto Laundering Spreads Beyond Ukraine
The warning comes amid a broader regional trend, with Russian-linked crypto laundering activities being tracked in Kyrgyzstan and elsewhere.
In recent months, the UK and US have imposed sanctions on networks tied to the rouble-pegged stablecoin A7A5 and exchanges suspected of continuing Garantex’s operations.
In July, it was reported that Russian entities are exploiting Kyrgyzstan’s crypto infrastructure to bypass international sanctions and procure dual-use goods for use in Ukraine.
There have also been parallels between Kyrgyz-based platforms and the sanctioned Russian exchange Garantex.
After Garantex was disrupted by law enforcement in March 2025, new entities like Grinex and Meer, both registered in Kyrgyzstan, exhibited similar transaction patterns and behavior.
Grinex, which began facilitating withdrawals using a Russian stablecoin called A7A5 shortly after the Garantex takedown, was registered within weeks of A7A5 issuer Old Vector, further suggesting coordination.
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