Can crypto help in Ukraine?

The Russian Invasion

On Monday 28th February, the fifth day of the Russian invasion of Ukraine, I contacted a Ukrainian acquaintance of mine to check if he was OK. He gave me an inspiring update on Ukrainians resilience and their determination to stand up to Russian aggression no matter what was thrown at them. He finished his message with a link to a Bitcoin wallet address raising funds to purchase military equipment.

Ukrainian Cryptocurrency Donations

Ukraine, like Ireland has become a tech hub and a major adopter of Cryptocurrencies. On day three of the Russian invasion Ukraine’s minister for digital transformation, Mykhailo Fedorov, tweeted out wallet addresses for donations in Bitcoin, Ether and Tether. According to Eliptic blockchain analysis, the Ukrainian government, and an NGO providing support to the military, have so far raised $56.2 million, through more than 106,000 Crypto asset donations. Appeals have been posted on social media and UkraineDAO, a decentralised autonomous organisation, has been set up to “help Ukraine defend itself from the Russian aggression”.

Crypto-community Donations

The Crypto community have shown great initiative in the way they use the tools at their disposal. On Feb 24, Andrew wang tweeted “how can we support the people of Ukraine with our resources? What about raising money with an NFT collection?” The result is Reli3f, an NFT collection by a group of 37 artists, that raises money through the sale of their art for the people of Ukraine. And because the sales are done through smart contracts on the blockchain, they’re fully transparent. When they launched their collection on Opensea, Reli3f sold out in 30 seconds and raised nearly one million dollars

Ukrainian Financial Restrictions

Such support by the Crypto Community for a beleaguered Ukrainian nation is an admirable and relatively straightforward story. But the Ukrainian crisis also raises more complex Cryptocurrency control issues. The National Bank of Ukraine now has a withdrawal limit of 100,000 Ukrainian hryvnia, roughly $3,350, as well as restrictions on exchanging local for foreign currencies. There are no such restrictions on Cryptocurrency trading. So will this scenario demonstrate Cryptocurrencies capacity to allow Ukrainians to store their wealth – even when their own sovereign currency is at risk? Or does it provide a way for Ukrainians to evade their own government’s financial restrictions – undermining the nation’s overall economic strategy at a time of crisis? Or perhaps both?

The Russian Dimension

The power of a person or a nation to use Cryptocurrencies to raise funds unencumbered by a central bank or authority is increasingly viewed as an important extension of personal and political liberty. However the ability of digital assets to circumvent restrictions applied by governments can work harm as well as good. Sanctions levied against Vladimir Putin and Russia’s financial institutions have been applied in the hopes of squeezing the Russian economy and forcing a speedy resolution to the conflict. The effectiveness of these sanctions may be reduced by Russia’s manipulation of its massive, estimated €200 billion, Cryptocurrency holdings. Another point to keep in mind is that Siberia, with it’s freezing cold temperatures is a hub for Cryptocurrency mining, which provides Russia with a reliable and increasingly significant supply of Bitcoin. And then there’s Putin’s development of the CryptoRuble.

The Bigger Picture

So can sanctions affect Russian Cryptocurrency holdings and transactions? This is a question that governments intent on punishing Putin are currently struggling with. But it’s not just in the field of international politics that issues of political control of cryptocurrencies are becoming suddenly topical. Across the globe revenue departments, financial institutions and the Crypto community have been watching developments in the Canadian Trucker blockade with close interest. According to CoinDesk the Ontario Provincial Police and the Royal Canadian Mounted police ordered all regulated financial firms to cease facilitating any transactions from 34 Cryptocurrency wallets tied to trucker led protests within the country. This goes to show that centralised exchanges and institutions can make Cryptocurrency holders vulnerable to controls. Cryptocurrency and its associated technology can truly make a difference in Ukraines struggle against aggression but it’s largely dependent on the co operation and blessing of traditional institutions, especially when using a centralised exchange. The war in Ukraine may be with us for a long time to come – throwing up many absorbing Cryptocurrency control issues in its wake. And as Cryptocurrency trading grows more widespread it will increasingly feature in other ethical and political debates within and between nations across the globe.

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