Cryptocurrency a ‘double-edged sword’ in Ukraine-Russia war, experts say

Cryptocurrency has become a useful tool on both sides of the Russia-Ukraine war, with experts arguing it won't ruin sanctions but could help civilians affected by the conflict.

Cryptocurrency has emerged as a “double-edged sword” in the war between Russia and Ukraine, but experts say it’s more likely to support citizens on both sides of the conflict than help oligarchs and other officials skirt economic sanctions.

The invasion of Ukraine, now stretching into its second week, has spawned western sanctions directed at Russian President Vladimir Putin, his allies and the country’s financial system.

The results have seen the Russian ruble plummet to all-time lows against the U.S. dollar and severe limitations on where the country’s regular citizens and richest oligarchs can move and access their money.

Trading volumes between the ruble and cryptocurrencies hit 15.3 billion rubles (US$140.7 million) on Monday, a three-fold jump from a week earlier, according to researcher CryptoCompare.

The decentralized nature of cryptocurrencies like Bitcoin has prompted some concerns that the digital assets could be used to skirt sanctions or, at minimum, blunt the effectiveness of the western economic penalties on Russia.

Mykhailo Fedorov, Ukraine’s vice-prime minister and minster of digital transformation, sent a tweet last week calling on all crypto exchanges to cease trading with Russian accounts, citizens and oligarchs alike.

That prompted backlash from some major exchanges such as Binance and Kraken, which indicated that while they would comply with sanctions on accounts tied to restricted individuals, they wouldn’t issue blanket bans on transactions across the Russian population.