Sanctions evasion has traditionally been viewed as a game of financial shell companies and hidden bank accounts. While those opaque traditional structures remain the bedrock of illicit finance, the mechanism has expanded to the blockchain at scale.

Nation-states have upgraded their capabilities not just to launder on-chain, but also to execute cross-border trade. The data support this shift toward large-scale evasion. In 2025, illicit addresses received at least US$154 billion, a 162% increase year-over-year.

The primary driver of this surge was a 694% increase in value received by sanctioned entities, totaling a staggering $104 billion throughout the year.

At the same time, cryptocurrency's role in nation-state strategy extends well beyond evasion. States are using blockchain infrastructure for a spectrum of licit and illicit objectives: trade settlement, reserve diversification, procurement of dual-use goods, ransomware enablement, cyber operations, and financial innovation.

As we noted in the introduction of our report, crypto adoption continues to expand globally across legitimate and illicit markets, creating a parallel environment in which the same stablecoin rails that facilitate remittances or cross-border commerce can also enable sanctioned trade flows.

This convergence can complicate enforcement; the focus is no longer solely on isolating bad actors, but also on identifying when large-scale use of crypto crosses into sanctions violations or national security risk. Against that backdrop, the remainder of this section examines how sanctioned entities — which often include the states that host, fund, and provide them with material support — are operationalizing the blockchain.

In 2025, international regulatory bodies significantly stepped up coordinated sanctions efforts targeting cryptocurrency-related financial activity perceived as facilitating illicit finance and sanctions evasion, with key actions from the US Office of Foreign Assets Control (OFAC), the European Union, the UK's Office of Financial Sanctions Implementation (OFSI), and allied Western nations.

OFAC continued to designate crypto actors and infrastructure tied to ransomware, state-linked evasion networks, and sanctions-circumvention services. This illustrates a consistently evolving regulatory approach to blockchain-native illicit activity.

Meanwhile, the EU adopted sweeping sanctions packages, including measures explicitly targeting Russian crypto providers and a ruble-backed stablecoin, A7A5. A7A5 facilitated $93.3 billion in transactions in just 10 months, reflecting the growing use of digital assets to circumvent sanctions and facilitate cross-border trade.

These efforts underscore an increasingly multilateral sanctions regime that blends traditional financial controls with blockchain-specific actions to disrupt the use of digital assets for circumventing economic sanctions.