Key facts
- Ukraine updated its sanctions against Russia's financial sector on June 15.
- The new sanctions specifically target cryptocurrency and digital asset platforms.
- The measures aim to prevent Russia from using modern financial instruments to evade existing sanctions.
- Sanctions prohibit transactions with virtual assets and related services.
- The ruble-pegged stablecoin A7A5 and the 'A7 network' are identified as tools for sanctions evasion.
- Promsvyazbank, a Russian state-owned bank, is a minority owner of the A7 network.
Ukraine has intensified its efforts to curb Russia's ability to evade financial sanctions by updating its sanctions regime to specifically target the country's cryptocurrency and virtual asset sector. The decree, signed by President Volodymyr Zelensky on June 15, builds upon existing measures imposed in February 2023.
The updated sanctions, based on proposals from Ukraine's National Bank, now encompass operators of digital financial asset platforms and cryptocurrency services. These measures prohibit any transactions involving virtual assets or the use of platforms that facilitate such activities. Ukraine asserts that Russia is increasingly relying on these digital financial instruments, including ruble-pegged stablecoins, to conduct international payments in violation of sanctions.
According to Ukraine's sanctions chief, Vladyslav Vlasiuk, a prominent digital asset used in these evasion schemes is the ruble-pegged stablecoin A7A5, which has already been sanctioned by the European Union. Vlasiuk stated that this stablecoin is used to pay for shipments of components, including electronic and dual-use goods, with estimated monthly transaction volumes exceeding $5 billion. He identified the "A7 network," created in 2024 and led by Ilan Shor, as a key part of this new financial infrastructure. Promsvyazbank, a Russian state-owned bank supporting the military-industrial complex, is a minority owner of the A7 network, which Ukraine has described as enabling payments for missile components.
These updated sanctions align Ukraine with the EU's recent packages, which also included sectoral bans on Russia-based crypto platforms and specific token restrictions. However, Ukraine's measures extend sanctions to the entire Russian financial sector, going beyond the EU's targeted approach.