WIREDGOV

Crypto is embedded in Russia’s procurement model, allowing it an access to Common High Priority Items that international sanctions were intended to deny. Huge disruption is necessary to apply pressure to Russia's supply chains for critical military components.

Russia’s war in Ukraine has been accompanied by one of the most comprehensive sanctions regimes in modern history. Export controls and financial restrictions have had a measurable impact on Russia’s procurement environment, reshaping supply chains for critical military components – known as Common High Priority Items (CHPIs). Direct access to Western suppliers has been curtailed and trade flows have been diverted through intermediary jurisdictions across Eurasia and Asia.

However, while sanctions have increased costs and complexity, they have not halted procurement. Instead, they have driven adaptation. As traditional financial channels have come under heightened scrutiny, payment settlement has emerged as a key point of vulnerability. In response, Russia and its intermediaries have increasingly turned to cryptocurrency, particularly stablecoins, to settle cross-border transactions outside sanctions-compliant banking systems.

Crypto-enabled settlement is now embedded in Russia’s procurement model, linking diverted CHPI supply chains with alternative payment mechanisms designed to blunt the disruptive effects of sanctions. Exchanges, successor platforms, payment agents, rouble-backed tokens, stablecoins and over-the-counter (OTC) brokers form a layered ecosystem that allows cross-border purchasing power with reduced exposure to traditional compliance controls. While sanctions have degraded parts of this infrastructure, targeting has often focused on individual entities rather than the networked architecture that sustains them.

Addressing this challenge requires ecosystem-level disruption: enhanced intelligence collection on OTC brokers and other off-chain actors; structured public-private data sharing to improve attribution; network-based sanctions targeting successor entities and bridging assets; coordinated diplomatic pressure on permissive jurisdictions; and closer integration of trade and financial enforcement. Without such a shift, sanctions will continue to reshape Russian procurement routes without materially constraining the financial mechanisms that enable them.

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