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Cryptocurrencies and economic sanctions

Author

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  • Almeida, José
  • Gonçalves, Tiago Cruz

Abstract

This study examines the role of cryptocurrencies in modern War, specifically during the Russia-Ukraine conflict. 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-Conflict, Conflict, 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 military conflicts. The results document the increased liquidity and interconnectedness of cryptocurrencies during military conflict periods and explore their potential use in evading sanctions and supporting War efforts.

Suggested Citation

  • Almeida, José & Gonçalves, Tiago Cruz, 2026. "Cryptocurrencies and economic sanctions," The North American Journal of Economics and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:ecofin:v:81:y:2026:i:c:s1062940825001779
    DOI: 10.1016/j.najef.2025.102537
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    Keywords

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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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