Sanctions imposed on Russia for invading Ukraine caused the rouble to plummet on Monday but as it dropped the value of cryptocurrencies including Bitcoin and Ethereum shot up.

Unlike the global financial system where central authorities can prevent Vladimir Putin’s regime from accessing the Kremlin’s foreign reserves, and Russian banks from using the SWIFT payments network, there are no technical means to block Russia and its oligarchs trading cryptocurrencies.

That doesn’t mean that unregulated cryptocurrencies provide a loophole for the country’s institutions and oligarchs, just that the enforcement mechanisms used by financial institutions to monitor transactions aren’t always available. Laws requiring cryptocurrency exchanges to verify their customers’ identities still apply in all jurisdictions where the sanctions have been issued.

Live updates on the Ukraine invasion

Caroline Malcolm, the head of international public policy for Chainalysis, said: “As with the traditional financial system, Russia can leverage cryptocurrency to evade the sanctions that are being put in place in response to their invasion of Ukraine. And as in the traditional financial system, the cryptocurrency ecosystem can put measures in place to identify transactions from identified sanctioned entities.”

Cryptocurrency not ideal for the ultra-rich

But for the volumes of trading that Russia would need to weather the sanctions covering $643bn in international reserves, there simply isn’t enough cryptocurrency available – and the volumes would be impossible to transfer covertly as the blockchain is, by design, a public ledger of all transactions.

Instead, as the country faces potential hyperinflation, the rise for Bitcoin and Ethereum is more likely to be caused by Russian citizens (rather than the government and oligarchs) looking to move their roubles into other currencies, or very possibly due to speculation from others about Russians doing so.