G7 officials say the US proposal to tax frozen Russian assets is gaining ground

A U.S. proposal for using the interest derived from $300 billion in frozen Russian assets to aid Ukraine could win broad support from countries worried about outright seizure of the underlying assets, U.S. Treasury Secretary Janet Yellen said on Thursday. Yellen welcomed what she called a "very constructive step" taken by the European Union to segregate the proceeds from assets held by Brussels-based Euroclear and transfer them to Ukraine, noting future interest could also be pulled forward to expand funds available for Ukraine. "This is an approach that could be broadly supported by countries that are concerned about the seizure of assets, and some of the interest could be brought forward through, for example, a loan," Yellen said in a Reuters Next interview in Washington.

A U.S. proposal for using future interest on some $300 billion in frozen Russian assets to aid Ukraine, instead of seizing them outright, is gaining momentum among the Group of Seven nations, two G7 officials said. Collateralizing the interest earned on the frozen Russian assets, which would amount to some $5 billion a year, is emerging as one of the favored options to bridge differences between the U.S. and Europe ahead of a G7 leaders summit in Italy in June. But G7 members are still arguing about certain "holdbacks" that would whittle down those expected windfall profits to just $2.5-$3.0 billion, one of the officials said, pointing to Belgium's 25% tax rate, a "convenience fee" applied by depository Euroclear, and a proposed litigation reserve.

Seven of the world’s strongest economies, including the US, are exploring how to tap the profits from frozen Russian assets to help Ukraine, ravaged by war.