Ukraine Relies On Crypto Amidst War With Russia
- The Russia-Ukraine war has launched crypto deeper into the spotlight as it shows how the industry can aid in humanitarian efforts.
Cryptocurrencies are fast becoming a part of the mainstream financial system, which means they now serve a greater purpose in society. For the first time, cryptocurrency is playing an unprecedented role in the war between Russia and Ukraine. The world is also witnessing the different use cases of these digital assets.
Some Ukrainians switched to cryptocurrencies as alternatives to their financial institutions. With the country in chaos, Ukrainians have found it hard to rely on their traditional banks. Millions of dollars worth of cryptocurrency have poured in to fund organizations and the Ukrainian army. According to Alex Bornyakov, Ukraine’s deputy minister for digital transformation, about $100 million in cryptocurrency has been given to help Ukrainians who are facing difficulties.
As of March this year, the Ukrainian government revealed that it had received at least $54 million in cryptocurrency donations. The Ukrainian government also enlisted the help of a number of cryptocurrency firms, including FTX, Kuna, and Everstake.
Advocates for Ukraine are pumping in more cryptocurrency to the country as the conflict with Russia rages on. Individuals, including crypto experts, were reportedly said to be disclosing their crypto wallet addresses and asking for donations on social media websites and platforms like Telegram.
Some organizations are using cryptocurrencies to purchase a wide range of military hardware, medical supplies, and even facial recognition tools for the embattled nation. Some of these fundraising initiatives have been going on for months.
Crypto donations are valuable to Ukraine since they are less impacted by geopolitical and macroeconomic issues. The Ukrainian currency has also suffered greatly from inflation as a result of the ongoing war. Donations made in crypto have proven useful to the country’s ailing economy.
Russia Using Crypto to Evade Sanctions
The US and its allies have imposed an unprecedented number of sanctions on Russia since its forces invaded Ukraine earlier this year. These sanctions were aimed at reducing Russia’s economic strength and causing the country to back down on its invasion. However, there are concerns that Russia could use cryptocurrency to evade sanctions.
Josh Olszewicz, head of research at Valkyrie Funds, said,
We do believe it is very likely that Russian companies and nationals are trying to use crypto assets like Bitcoin or the US Dollar-pegged stablecoin, such as Tether (USDT), to circumvent the economic sanctions.
Cryptocurrencies, unlike banks, are designed to operate independently from financial authorities like the central bank or governments. They also permit peer-to-peer (P2P) transactions to occur without the need for middlemen. This single feature allows sanctioned countries such as Russia to use cryptocurrency to protect their assets and carry on with international transactions.
Regulators are concerned about the possibility of using crypto to evade sanctions. There have been calls for crypto wallet addresses belonging to Russians to be blacklisted. However, little effort has been made in that regard.
Responding to the demands for Russian addresses to be banned, Coinbase, one of the biggest cryptocurrency exchanges in the United States, noted that it had no intention of completely banning Russian users. However, the exchange said that it will halt any transaction that involves sanctioned people or organizations. Others such as Binance said they’ll focus on sanctioned organizations rather than restrict all Russian users or IP addresses.