RUSI says Ukraine could recover at least $10 billion lost to unregulated crypto activity if it tightens rules that currently leave major gaps for illicit finance. The UK-based Royal United Services Institute warns that a lagging regulatory framework is eroding public finances and creating security risks.
The report identifies over-the-counter (OTC) markets and informal money-mule networks — locally called “drops” — as primary vulnerabilities. Those networks are estimated to drain around $24 million from Ukraine’s budget each month. Banks closed roughly 80,000 mule accounts last year, but low-income recruits continue laundering funds for as little as $120.
RUSI recommends that Kyiv focus on attracting specific assets, notably stablecoins, tighten rules where cybercrime and illicit finance overlap, and clarify taxation and compliance requirements so legitimate crypto businesses are not driven away. Kyiv passed a Law on Virtual Assets in February 2022, but the measure remains dormant until parliament approves a separate taxation bill.
The timing is critical. As an EU accession candidate, Ukraine must harmonize its virtual asset rules with EU standards by late 2025, and remain compliant with FATF anti-money-laundering expectations. Experts warn Ukraine’s current “partially compliant” FATF status risks downgrading in upcoming reviews, which would heighten financial exclusion and reputational harm.
RUSI also highlights how criminal actors — including networks linked to Russia — exploit neighbouring jurisdictions to move funds and procure sanctioned components, and how Telegram-based drug sales paid in crypto add operational and morale risks for troops and civilians.
Short-term steps suggested include clearer taxation, tighter know-your-customer enforcement for OTCs, and targeted sanctions coordination. Without action, Ukraine risks becoming a persistent laundering hub; with prompt reform, authorities could recover significant revenue and bolster financial resilience.
Source: Decrypt. Read the original coverage for full details.