TLDR
- Ukraine may recover $10 billion with proper cryptocurrency regulation.
- Criminals and Russian actors exploit Ukraine’s unregulated crypto market.
- Law “On Virtual Assets” passed in 2022 remains unenforced.
- Money mule operations cost Ukraine around $24 million every month.
- EU-aligned crypto reforms expected by the last quarter of the year.
Ukraine faces ongoing revenue losses due to crypto-related crimes, with estimates indicating a potential recovery of $10 billion. The Royal United Services Institute (RUSI) released a report highlighting regulatory gaps that criminals exploit. Proper oversight, the report argues, can help Ukraine recover billions in lost budget revenue.
Ukraine Faces Tax Losses from Crypto Crimes
The RUSI report outlines how criminals use unregulated platforms in Ukraine to hide illegal financial flows. These include corrupt officials, money launderers, and even Russian military-linked actors. This exploitation results in significant tax revenue losses and security risks.
Ukraine’s crypto ownership rate remains one of the world’s highest, increasing vulnerability to misuse. Despite this, the country lacks a fully enforced legal framework for digital assets. While the parliament passed the “On Virtual Assets” law in 2022, its enforcement remains pending.
The absence of tax regulations has worsened the situation. According to the Kyiv Independent, regulation could help authorities trace criminals faster. It could also yield over $200 million annually in tax income from exchanges.
Money Mule Schemes Fuel Illegal Activity
RUSI flagged key issues related to over-the-counter (OTC) crypto trades and “money mule” practices. These schemes involve Ukrainians unknowingly renting out bank accounts to criminals in exchange for small payments, sometimes as little as $120.
Restrictions by the National Bank of Ukraine (NBU) to stop capital flight spiked crypto use. This surge created new channels for laundering illicit funds. Social media and encrypted apps now support these decentralized mule networks.
Oksana Ihnatenko, co-author of the RUSI report, said, “Some people don’t even know they are being used.” This organized activity reportedly costs Ukraine around $24 million each month. Crypto drops have become a growing, coordinated threat.
Reform Urgency Increases With EU Alignment
Ukraine must implement key reforms under the EU’s Ukraine Facility Plan to meet membership criteria. One of these reforms is aligning crypto laws with Europe’s MiCA regulation. Two bills to support this are still under discussion in parliament.
The plan requires final alignment by the last quarter of the year. Successful reform will allow the enforcement of the Virtual Assets law, support anti-money laundering efforts, and collect digital taxes.
The RUSI warned, “Failure to regulate OTC desks could harm Ukraine’s credibility with partners.” Russia-linked actors reportedly exploit crypto to procure banned goods.
