Sanctioned states and entities received about $104 billion in cryptocurrency in 2025, roughly eight times the 2024 total, according to Chainalysis’s 2026 Crypto Crime Report. The number matters because sanctions are the main tool the United States uses to pressure hostile governments without sending troops. When the money finds another road, the tool loses force.
Here is how the tool is supposed to work. Under the International Emergency Economic Powers Act of 1977, the president can declare a national emergency and order assets blocked. The Treasury’s Office of Foreign Assets Control runs the program, publishes the list of banned people and companies, and cuts them off from the US dollar and the banks that touch it. Almost every large transaction in the world eventually passes through a dollar bank, so landing on that list has historically meant being frozen out of the global economy.
Crypto is the road around the bank. The clearest case came on August 14, 2025, when OFAC sanctioned a ruble-backed stablecoin called A7A5. It was issued by a Kyrgyzstan company called Old Vector, built for Russian users after the exchange Garantex was shut down, and backed by Russia’s state-owned Promsvyazbank, a bank already sanctioned for financing the military, and by Moldovan politician Ilan Shor, who was convicted in a billion-dollar bank fraud. At its peak it moved about a billion dollars a day. It exists to move Russian money the dollar system will not touch.
Stablecoins are also where the government has its best new lever, when the issuer cooperates. A stablecoin is a token a company promises to redeem for a dollar, and that company can freeze any wallet holding it. Tether, the largest issuer, has done exactly that after Treasury designations, freezing $344 million in its token on the Tron network in April 2026. A freeze like that happens at the code level in minutes. Freezing a bank account can take days of calls to a correspondent bank. The catch is the word cooperates. The power only reaches issuers who choose to answer to Washington.
That gap is what the GENIUS Act, signed July 18, 2025, was written to close. It is the first US law for stablecoins. It puts issuers under the Bank Secrecy Act, tells FinCEN to write anti-money-laundering rules, and sets conditions on foreign issuers that want to reach American users. The plainspeak problem is that its main lever is access to the US market, and a ruble stablecoin made in Kyrgyzstan for Russians does not want that access. The law can discipline the issuers who want in. It cannot reach the ones built to stay out.
So who gains and who pays. The winners are the governments the sanctions were meant to isolate, Russia and Iran’s Revolutionary Guard and North Korea, which now have a working way to move money, plus the offshore operators who build the tokens for them. North Korea alone stole more than $2 billion in crypto in 2025, including $1.5 billion from the Bybit hack, per Chainalysis. The losers are harder to see. Sanctions are the pressure option a government uses short of military force, and when that option leaks, what remains is costlier and riskier. Compliant US stablecoin companies pay too, carrying the cost of the new rules while their offshore competitors carry none.
The blockchains are public, so Treasury can watch this money move in a way it never could through shell-company bank wires. Watching it and stopping it are different problems. Whether the GENIUS Act’s foreign-issuer rules can make a sanction stick when the money travels as tokens is the test the next few years will run.
Frequently Asked Questions
How much crypto reached sanctioned states in 2025?
About $104 billion, roughly eight times the 2024 total, according to Chainalysis’s 2026 Crypto Crime Report.
What is the A7A5 stablecoin?
A ruble-backed stablecoin issued by Kyrgyzstan-based Old Vector and sanctioned by OFAC on August 14, 2025. It was backed by Russia’s state-owned Promsvyazbank and Moldovan politician Ilan Shor, and at its peak moved about $1 billion a day.
What does the GENIUS Act do?
Signed July 18, 2025, it is the first US law for payment stablecoins. It places issuers under the Bank Secrecy Act, directs FinCEN to write anti-money-laundering rules, and sets conditions on foreign issuers seeking access to American users.