Work

Cryptocurrencies and economic sanctions

Year: 2025

Type: article

Abstract: This study examines the role of cryptocurrencies in modern conflicts, specifically during the Russia-Ukraine war. Utilizing a Time-Varying Parameter Vector Autoregression (TVP-VAR) model, the research assesses the dynamic financial behaviors of cryptocurrencies, focusing on changes in liquidity, safe haven status, and their use in circumventing economic sanctions. The analysis distinguishes financial behaviors across three distinct phases: Pre-War, War, and financial sanctions periods, highlighting the interaction between cryptocurrencies and traditional financial markets. The findings indicate shifts in the role of cryptocurrencies from net transmitters to net receivers of spillovers in both returns and volatility, particularly during the financial sanctions phase. This study provides insights into the integration of cryptocurrencies with traditional financial assets and their potential impact on local economies during conflicts. The results document the increased liquidity and interconnectedness of cryptocurrencies during war periods and explore their potential use in evading sanctions and supporting war efforts.

Source: The North American Journal of Economics and Finance

DOI: 10.1016/j.najef.2025.102537

Authors: José Almeida, Tiago Cruz Gonçalves

Institutions: Iscte – Instituto Universitário de Lisboa, ISCTE Business School, Unidade de Investigação em Desenvolvimento Empresarial, University of Lisbon, ISEG - Instituto Superior de Economia e Gestão

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,050