The Russia-Ukraine crisis has put crypto to the test in a real-world conflict where sanctions and imaginative blockchain financing methods exist.
The battle, now in its ninth month, has shown a slew of blockchain benefits, such as the ability to fund humanitarian efforts. It has also demonstrated how much control national governments have over crypto networks.
According to Vadym Synegin, co-founder of IT and crypto solutions business Tecor, cryptocurrencies offer a distinct benefit in situations when there is an elevated danger of money transfer interruptions due to the centralization of traditional systems.
“With most markets governed by centralized authority figures who can readily bow under political tensions, crypto markets remain more or less decentralized, meaning that their operating efficiencies during times of crisis are further increased,” he said.
So, what else has the Russia-Ukraine Crisis revealed about cryptocurrency?
Donations of Cryptocurrency for Humanitarian Purposes
The Russia-Ukraine conflict has demonstrated that bitcoins can be used to support military operations. Notably, the Ukrainian government began taking bitcoin donations at the start of the year to broaden donor inclusion, which resulted in the establishment of the Crypto Fund of Ukraine.
The fund, which was established in collaboration with Kuna, FTX, and Everstake to support Ukraine’s humanitarian aid and military projects, is currently managed by the Ministry of Digital Transformation. So far, the scheme has helped the Ukrainian government earn more than $100 million in cryptocurrency donations.
Nonetheless, some pro-Ukraine crypto fundraising organizations have turned to novel crypto instruments such as decentralized autonomous organizations (DAOs) to generate donations for the country.
The UkraineDAO, one of the most visible, was established in February with the sole objective of giving financial assistance to the Ukrainian military. Russian critic Nadya Tolokonnikova, a founding member of the Pussy Riot female protest organization, is one of the project’s co-founders. PleasrDAO and Trippy Labs, a generative NFT studio, are also founder members of UkraineDAO. So far, the effort has raised more than $8 million.
Among the UkraineDAO’s most remarkable achievements were the recent selling of a nonfungible token (NFT) of the Ukrainian flag for slightly over $6 million in Ether (ETH). It is now one of the top 20 most costly NFTs of all time.
Kayla Kroot, the co-founder of the Koii Network, spoke with Cointelegraph about the present use of cryptocurrency in the Ukraine crisis. Her organization is working on new blockchain models, such as Web3.
According to the executive, cryptocurrencies have allowed citizens caught up in the conflict to keep their money during these tough times:
“Cryptocurrency was created to assist worldwide citizens in maintaining control of their money.”
Kroot also highlighted an increase in the use of digital currency by humanitarian organizations operating in the country. “Organizations like World Central Kitchen ran crowdsourcing campaigns”, In WCK’s situation, this meant accepting ETH donations. These funds were distributed with fewer limits and control, allowing money to reach those who needed it the most quickly she noted.
Ukrainian Government has received Millions of Dollars in Direct Cryptocurrency Donations.
The European Commission issued sweeping sanctions against Russian crypto custodial accounts controlled by European firms and exchanges in October. Additionally, EU blockchain companies were barred from offering crypto custody services to Russian enterprises.
- In response to Russia’s invasion of Ukraine, new legislation was enacted to prevent Russia from circumventing sanctions.
- Previously, Russian crypto wallets and accounts had a trade and deposit limit of up to 10,000 euros.
- Recent EU crypto legislation has compelled some big exchanges with European operations, like Binance and Coinbase, to restrict services to Russian individuals and businesses to avoid a regulatory battle.
- Other regulated cryptocurrency exchanges, like Kraken, Crypto.com, and Blockchain.com, have also stopped selling cryptocurrency services to Russian citizens as a result.
Conclusion
The war between Russia and Ukraine has highlighted the usage of cryptocurrency in communal effort situations for the common good. While the Ukrainian government has received millions of dollars in direct crypto donations, some digital currency fundraising efforts have been thwarted by scammers looking to benefit from the conflict.
More crypto benefits and drawbacks are expected to emerge when use cases evolve in more diversified situations.
