"Ukraine's Crypto Wild West Costs $10 Billion—Regulation Could Bring It Back"

Ukraine has lost over $10 billion in cryptocurrency-related scams, according to a report by the Royal United Services Institute (RUSI), a prominent U.K. defense and security think tank. The findings highlight the vulnerabilities in Ukraine’s unregulated crypto market, which have been exploited by a range of actors, including corrupt officials, ordinary criminals, and the Russian military. The RUSI report underscores the urgent need for stronger oversight to recover lost revenue and prevent further losses [1].

The study notes that Ukraine has one of the highest cryptocurrency ownership rates in the world. However, the country lacks a comprehensive legal framework to govern digital currencies effectively. Despite the passage of the “On Virtual Assets” law in early 2022, the legislation has not yet been fully enforced, due to pending amendments to the Tax Code. Without a clear regulatory structure, illicit actors have been able to exploit the system with relative ease [1].

One of the key issues identified by the RUSI report is the surge in over-the-counter (OTC) crypto transactions within Ukraine. These activities are particularly attractive to criminal elements seeking to bypass traditional banking systems. Additionally, the use of cryptocurrencies to procure sanctioned goods for the Russian military has further complicated the situation. The report also highlights the role of "money mules," a term used in Ukraine to describe individuals who unknowingly assist in money laundering by providing their bank accounts for fees as low as $120 [1].

Experts estimate that Ukraine’s state budget is losing approximately UAH 1 billion (around $24 million) per month due to money mule operations linked to cryptocurrency. These schemes are increasingly decentralized and organized through social media and encrypted messaging platforms. Oksana Ihnatenko, managing director of the Center for Financial Integrity in Ukraine and co-author of the RUSI report, emphasized that many individuals are unaware they are being used in these operations. "Some people don’t even know they are being used as ‘money mules,’ with criminals lying to them about what they want to use their accounts for," she said [1].

Ukraine is currently pursuing regulatory reforms as part of its accession process with the European Union. The Ukraine Facility Plan outlines a series of reforms, including aligning its virtual asset legislation with the EU’s Markets in Crypto Assets (MiCA) regulation. The goal is to implement these changes by the end of the year. However, two additional bills incorporating EU regulations into Ukrainian law are still under consideration. Without these legislative efforts, Ukraine risks not only continued financial losses but also a weakening of its position with international partners [1].

The RUSI report suggests that enhanced oversight in the crypto sector could allow Ukraine to recover up to $10 billion in lost revenues. This would not only strengthen the national budget but also improve the country’s ability to combat illicit financial flows. The report also warns that failure to regulate OTC desks could further undermine Ukraine’s credibility on the global stage, particularly as the country seeks support for its ongoing war effort [1].

Source: [1] Ukraine may recover $10 billion with adequate ... (https://www.mitrade.com/au/insights/news/live-news/article-3-1081828-20250830)