Ukraine/Russia: bitcoin, potential sanctions buster

Ukraine/Russia: bitcoin, potential sanctions buster

Freewheeling crypto enthusiasts boast of advancing financial liberty. But digital currencies may now be commandeered by Russia as weapons in the battle to crush the freedom of Ukraine.

Crypto assets could help Russia to continue trading with the west even as intensifying sanctions choke off conventional payments channels.

It would hardly be a frictionless switch. Bitcoin, for example, is a volatile and clunky transaction medium. The stock of cryptos is also tiny compared with important currencies such as the dollar. The entire crypto market has a market capitalisation of $1.7tn, not much bigger than the Russian banking assets targeted by sanctions, says consultancy Elliptic.

Sanctions busters would need to use non-compliant platforms. Crypto exchanges such as Binance are blocking the accounts of any Russian clients targeted by sanctions, though holding out against Ukrainian requests to freeze all Russian users.

Any business that facilitates prohibited transactions can expect severe repercussions. Last September, the US Treasury imposed sanctions on Suex, a virtual currency exchange, for its role in ransomware transactions. Last month, the FBI announced it was launching a unit for blockchain analysis and virtual asset seizure.

Law enforcement is helped by gaps in the secrecy around cryptocurrencies. Bitcoin users, for example, are linked to a public address. But