The European Union’s response to changing typologies of Russian cryptocurrency sanctions evasion (2022–2026)

Abstract

Since Russia’s full-scale invasion of Ukraine on 24 February 2022, the European Union has adopted twenty successive sanctions packages against the Russian Federation and enacted landmark crypto-asset regulatory instruments, including the Markets in Crypto-Assets Regulation (MiCA), the Transfer of Funds Regulation (TFR), and the Anti-Money Laundering Regulation (AMLR). Over the same period, Russian actors have exploited cryptocurrencies at growing scale to circumvent these restrictions, with illicit crypto volume linked to sanctioned Russian entities reaching record levels by 2025. This master’s thesis provides the first systematic, longitudinal analysis of how Russian crypto-enabled sanctions-evasion typologies evolved between 2022 and 2026 and how the EU’s regulatory and supervisory framework adapted in response. The study employs qualitative content analysis operationalised through two instruments: a blockchain analytics coding table that identifies, classifies, and tracks evasion typologies across four chronological phases, and a three-dimensional regulatory matrix evaluating EU measures along regulatory directness, targeting mode, and jurisdictional reach. The empirical material draws on 27 long-form sources combining blockchain analytics reports from Chainalysis, TRM Labs, and Elliptic with EU legislative acts and sanctions packages. The theoretical framework integrates Regulatory Responsiveness Theory (Braithwaite, 2011), Smart Regulation Theory (Gunningham & Sinclair, 2017), and a regulatory selectivity framework grounded in EU financial regulation literature (Kirschenbaum & Véron, 2018; Moloney, 2023). The analysis finds that Russian crypto-enabled sanctions evasion shifted from fragmented, criminally driven activity in 2022 - centred on high-risk exchanges, privacy coins, and shortlived NFT-based transfers to an institutionalised, state-aligned digital financial architecture by 2025–2026, dominated by the ruble-pegged stablecoin A7A5, which processed over $93 billion in cross-border trade settlement for sanctioned Russian entities. The EU’s regulatory response followed a parallel escalatory trajectory: from indirect, infrastructure-targeted, EU-only measures in 2022–2023 through the first direct actor designations and creation of AMLA in 2024, to total sectoral bans, asset-specific crypto prohibitions, and explicitly extraterritorial measures in 2025–2026. All three hypotheses are confirmed: EU regulatory activity intensified in correspondence with each new wave of typologies; the framework progressively incorporated crypto-specific risks; and direct regulatory instruments were concentrated on primary, high-volume typologies while secondary ones, most notably crypto mining, received no direct response throughout the period.