Enter stablecoins: digital assets pegged to fiat currencies that promise to revolutionnize payments. Web3 maximalists have been going on and on about how crypto is gonna change the world and all that business, and they’ve mostly been wrong. Stablecoins have become the latest lightning rod in debates about sanctions, financial privacy, and who get to control the money pipes. The thing is, this technology isn’t some magic bullet for sanctions evasion, nor is it the apocalyptic threat to regulation and order that policymakers fear.
The real deal on sanctions
First, let’s just call it like it is: Can stablecoins help sanctioned countries evade restrictions? Yeah, probably. But guess what else does? Cash. Gold. Art. And ironically, traditional banking.
North Korea didn’t need crypto has been moving billions through shell companies for decades. When Iran got cut off from the financial system, they just started bartering oil for goods with China. And after Russia’s SWIFT ban? Western banks suddenly noticed transactions exploding through Turkey and Kazakhstan. The awkward truth is that sanctioned countries have always found workarounds, with or without blockchain.
Potentially better for enforcement
Here’s something the crypto critics miss: stablecoins might actually make sanctions more effective, not less. Unlike cash or gold, blockchain leaves a permanent and public trail.
When the US Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in 2022, they didn’t vaguely target suspicious accounts, they published exact wallet addresses for everyone to see. Circle, the company behind USDC, has blacklisted over 75 wallet addresses tied to sanctioned entities. No months-long investigation needed – they can just push an update and boom, those wallets are frozen.
This process isn’t perfect, but it’s a hell of a lot more transparent than following cash across borders or untangling shell companies buried in tax havens.
KYC is just security theatre
Let’s talk about Know Your Customer requirements. Traditional finance loves to claim that this is what keeps us safe from bad guys. There’s some truth there – identity verification does catch some fraud.
But KYC has a massive downside: it locks out 1.7 billion people worldwide who don’t have government IDs, fixed addresses, or live where banks refuse to operate. In Nigeria, stablecoin adoption skyrocketed, not because people wanted to dodge regulations, but because they needed basic financial services their banks couldn’t (or wouldn’t) provide.
The dirty secret? Most KYC is just a checkbox exercise. Banks file millions of Suspicious Activity Reports (SARs), most of which just gather dust. According to the UN, only about 0.05% of laundered money globally ever gets caught. For all the compliance overhead, the current system catches basically nothing.
Beyond black and white
The future isn’t about choosing between wild-west finance and total surveillance. The most interesting projects are exploring middle grounds.
Some stablecoin platforms are experimenting with programmable compliance – smart contracts that can enforce certain rules while preserving privacy where appropriate. Others are developing identity systems that let you prove you’re not on a sanctions list without uploading your life history to a database.
The uncomfortable truth
This whole debate reveals something deeper about what we want from modern finance. We’re asking for contradictory things:
- Systems that block bad actors but keep working for everyone else.
- Privacy for regular people but transparency for authorities.
- Innovation without enabling new forms of crime.
These aren’t technical problems – they’re philosophical ones about what kind of world we want to build. The technology itself is neutral. How we implement and govern these systems determines whether they expand freedom or control.
The next time someone asks if stablecoins help sanctioned countries, the honest answer is: sure, but no more than the tools we already have. The better question is: how do we build financial systems that can achieve our security goals without losing our values of connectivity and inclusion? The most effective sanctions might not be the ones that cut people off from the global economy, but the ones that create alternatives so compelling that following the rules becomes the obvious choice.
