UK Treats Crypto Network Like a Sanctioned Bank After Claims It Processed $90B for Russia

Why It Matters

By classifying crypto exchanges as banks, regulators signal that digital‑asset infrastructure is now a frontline in sanctions enforcement, potentially curbing Russia’s ability to fund its war and setting a global precedent for crypto regulation.

Key Takeaways

• UK applies bank‑level sanctions (Regulation 17A) to crypto exchanges
• A7 network allegedly moved $90 billion in 2025 via ruble stablecoin
• HTX linked to $4.9 billion transfers to sanctioned Russian entities
• Stablecoins now account for 84% of illicit crypto transaction value
• EU also targeting A7A5, indicating coordinated Western crackdown

Pulse Analysis

Western sanctions have forced Russia to innovate beyond traditional banking, turning crypto‑based stablecoins into a lifeline for cross‑border trade. The UK’s decision to apply Regulation 17A—originally designed for sanctioned banks—to exchanges such as HTX underscores a strategic shift: digital‑asset platforms are now viewed as critical financial infrastructure. This legal escalation not only freezes assets tied to the A7 network but also sends a clear message that crypto intermediaries will face the same compliance burdens as legacy institutions, raising the bar for anti‑money‑laundering controls across the sector.

The A7 network, launched in late 2024, operates a ruble‑backed token, A7A5, that mimics the speed and dollar‑peg stability of USDT while sidestepping the freeze‑point that crippled earlier Russian stablecoins. Chainalysis estimates the token processed roughly $93 billion in under a year, funneling funds to state‑linked entities and supporting military procurement. By moving billions outside the SWIFT system, the network has effectively created a parallel financial pipeline that rivals traditional correspondent banking, allowing Russia to sustain a war effort despite a $450 billion hit to its economy.

The coordinated response from the UK and the EU signals a broader regulatory convergence aimed at closing crypto loopholes. Financial firms worldwide will need to reassess correspondent relationships with crypto exchanges, implement robust transaction monitoring, and prepare for potential bank‑level sanctions. For the crypto industry, the precedent raises compliance costs and could deter illicit usage, but it also forces legitimate actors to adopt higher standards of transparency. As governments refine their toolkits, the balance between innovation and enforcement will shape the next chapter of digital‑asset regulation.