According to the University of New South Wales (UNSW), Russia has one of the highest levels of crypto adoption, offering market participants a way around economic sanctions.

In an article published last week, UNSW Business School’s Elvira Sojli explained that before the Russia-Ukraine conflict, Russia was in third place among countries sending the largest share of crypto transfers abroad.

And while some speculate that cryptocurrency alone will not allow Russia to circumvent a barrage of sanctions aimed at punishing Moscow for its invasion of Ukraine, Ms. Sojli is not convinced.

“Sanctions, particularly SWIFT, halt transactions through certain banks, meaning payments for purchases cannot be settled. If the seller (Russia) accepts cryptocurrencies, and the buyer is ready to use crypto to pay for the goods, then the closure of SWIFT will not be so relevant,” Ms. Sojli explained.

"The Russian counterparty then holds the crypto until it can convert it to the required currency or to pay for other transactions using crypto."

Ukrainian politicians are urging crypto and blockchain platforms to block the addresses of Russian users, but preventing Russia from using crypto is not easy, Ms. Sojli argued.

"There's nothing to prevent that from happening," she said.

"They can use legislation for all listed exchanges, but it's harder to manage crypto circulation outside of the dark/deep web exchange system."

Ms Sojli speculated that short of banning Russia, there was not much governments could do.

“It is very difficult to regulate because it is outside the system. They can legislate that all transactions, including crypto, confirmed to be with Russian accounts will be considered illegal and subject to fines,” Ms. Sojli said.

"Illegal is a step too far, but a regulatory framework is needed," she concluded.

To date, data from blockchain tracking firm Elliptic shows that cryptocurrency investors have donated more than $63.8 million worth of digital assets to the Ukrainian government and a non-profit organization supporting the country's military.

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Already an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.