This study examines the role of cryptocurrency in Russia as a response to increasing international sanctions. As sanctions restrict access to global financial markets and advanced technologies, Russian businesses and individuals are increasingly leveraging digital currencies as a means to circumvent economic restrictions. The study also explores Russia’s regulatory adaptations, aiming to strike a balance between fostering innovation in digital finance and addressing national and international security concerns.This research employs a comprehensive review of regulatory policies, financial impacts, and trends in cryptocurrency adoption in Russia following the imposition of sanctions. It analyzes key government policy frameworks, such as the “On Digital Financial Assets” law, and draws insights from surveys and interviews with Russian businesses, financial institutions, and investors to assess cryptocurrency’s influence on economies affected by sanctions.The findings indicate that medium-sized enterprises and younger investors in Russia have increasingly adopted cryptocurrency as a financial alternative under sanctions, driven by its decentralized nature and its capacity to facilitate cross-border transactions. However, large corporations show reluctance due to concerns over security, regulatory uncertainties, and perceived volatility. The Russian government has adopted a cautious regulatory approach, seeking to harness cryptocurrency’s financial potential while addressing the risks of illicit use. This highlights a complex balancing act between fostering financial resilience and adhering to international standards.This paper provides an in-depth analysis of the unique role of cryptocurrency in a major economy facing sanctions, contributing to the literature on financial resilience through digital currencies. It offers valuable insights into how geopolitical factors influence cryptocurrency adoption and explores the regulatory challenges faced by nations under sanctions. The findings are particularly relevant for policymakers, financial institutions, and scholars interested in the intersection of cryptocurrency, economic sanctions, and regulatory control.
Pavlova et al. (Sat,) studied this question.