KCryptocurrencies have been all over the media for the past few days. While critics see the danger that Bitcoin and Co. could be used by Russian oligarchs to circumvent western sanctions, supporters praise the considerable amount of donations that the Ukrainian government has received in cryptoassets. Crypto-based investments seem to be ubiquitous and now they have arrived in the harsh reality of war. If you believe the many media reports, both sides seem to be using the new technology heavily for their own purposes. A closer look, however, shows that these claims mostly hide important facts, on the part of the critics as well as the supporters.

Let’s start with the sanctions or the accusation that cryptocurrencies are a simple evasion instrument. The starting point of the argument is the fact that decentralized cryptocurrencies are by definition designed to be resistant to censorship. The balances can be held in custody themselves – i.e. if a sanctioned person had Bitcoin in their portfolio that they themselves held in custody, they could independently transfer this Bitcoin to another person without this Bitcoin transaction being able to be blocked. Superficially, given such a starting position, one could well come up with the idea that sanctions are being circumvented as a result. But the reality is a little different.

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