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Which Side of the War is Crypto on?
< 1 Min Read
Total Words: 519
Annelise Osborne
Co-Founder
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- Published on June 15, 2022
- Location: USA
Russia’s invasion of Ukraine has brought a lot of attention to the cryptocurrency industry, with many of the aspects of blockchain technology being put to the test. Mykhailo Fedorov, Ukraine’s deputy prime minister, recently asked major crypto exchanges to block the addresses of Russian users. The Biden administration then considered sanctioning Russian cryptocurrency assets and limiting certain Russian individuals and groups from using crypto exchange services.
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However, Russia’s cryptocurrency activity is currently much lower than it has been in the last two years. According to Chain analysis, Russian Ruble-denominated crypto activity was under $35 Million on March 3, indicating a relatively low number of crypto transactions occurring at the onset of the invasion.
When Russia invaded Ukraine on Feb. 24, cryptocurrencies posted strong gains. Bitcoin rallied from $38,300 to $44,400, and Ether jumped to $3,000, up from $2,400.
There are several reasons why cryptocurrency has not taken off in Russia in the way many had expected. The country’s cryptocurrency ecosystem is not very well built out, as the country was initially slow to adopt digital currencies. Given the scale and impact of the US and NATO sanctions, it is very unlikely that the country can use digital currencies to hide assets. Additionally, converting assets to crypto is hard to do as the crypto exchange would eventually have to be converted into a fiat currency, which makes it highly traceable.
Even before the invasion, the United States government was worried that cryptocurrencies could be used as a medium to dull the impact of economic sanctions. However, there is very little evidence that this type of activity has come to fruition. It seems that most cryptocurrency trading platforms are connected to governments, which disregard the fully decentralized nature of cryptocurrencies themselves. The increasing regulatory requirements around most crypto exchanges mandate customers to authenticate their identities. It is important to note, however, that these regulations differ per country, making enforcement very difficult. In addition, as identified by the Economist, cryptocurrency transactions are not as private as traditionally thought; once anonymous wallets are linked to their holders, it is very easy to trace transactions including illegal ones.
On the other side of the conflict, the Ukrainian government has set up a website to centralize all of its crypto-based fundraisings, accepting several currencies including Bitcoin and Dogecoin. The government has received almost $100 million in crypto donations alone. Since Ukraine cannot buy all of its needed supplies using cryptocurrency, the government has had to convert a majority of these donations back to fiat currency; however, Ukraine’s Deputy Prime Minister reported that 40% of Ukrainian vendors have begun accepting cryptocurrencies as means of payments. With Ukraine’s banking system extremely limited, cryptocurrency is providing Ukrainian citizens with access to stable funds that are accessible 24/7.
Ukraine’s Vice Prime Minister said recently that in exchange for donations, donors can soon receive an NFT to show their support of the Ukrainian army.
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About the Author
Annelise Osborne
Co-Founder
Women of Influence (Innovation) winner Annelise is the co-founder of GreatX with prestigious accolades to her name. Annelise has 25+ years of experience in the capital market and has in the past managed portfolios as large as $400B.
About the Company
GreatX is a new-age wealth creation digital asset backed by the full faith and safety of U.S Treasury Bonds. These digital tokens are revolutionizing legacy products with modern instruments to open global avenues, especially for investors across the globe who are interested in investing in the U.S. GreatX enables global investors to own real estate in the U.S and earn guaranteed returns, assured security, and unmatched benefits. GreatX are smart securities democratizing wealth through decentralization and opening the gates of opportunity to a global audience.
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