Opinion: The Ambivalent Role of Cryptocurrency in the Ukraine-Russia Conflict
Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the views and opinions of the editorial team at crypto.news.
Cryptocurrencies have long been a topic of debate, with proponents arguing for their potential to revolutionize the financial system and prevent centralized control, while critics claim they are primarily used for illicit activities like money laundering. However, like a coin, cryptocurrencies have two sides that can be used for good or bad.
The issue of cryptocurrency and money laundering is a contentious one, as it applies to both cryptocurrencies and fiat currencies, despite the existence of strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. However, the positive uses of cryptocurrencies far outweigh the concerns of skeptics.
A prime example of the positive use of cryptocurrencies is their role in raising donations for the war in Ukraine. The amount of cryptocurrency received for humanitarian aid and support for the Ukrainian army far exceeds the amount used for illegal purposes, such as funding hacker groups or supporting mercenary organizations.
From the beginning of the Russian invasion in February 2022, Ukraine has utilized every means possible to raise funds for defense and humanitarian aid, including cryptocurrency donations. As of July 2023, Ukraine has received $225 million in crypto donations, according to Crystal Blockchain analytics. Notable organizations that have raised significant amounts include Aid For Ukraine ($60 million+), Come Back Alive ($28 million+), and the Serhiy Prytula Charity Foundation ($3.2 million+).
Aid For Ukraine, in particular, is a crypto fund that is actively supported by the Ukrainian government, specifically the Ministry of Digital Transformation of Ukraine. This initiative was organized by two Ukrainian companies, Everstake and Kuna crypto exchange. The fact that a crypto initiative has gained government support sets a positive example for other countries on how cryptocurrencies can be utilized for the greater good.
Another noteworthy example is the sale of the Ukrainian flag as a non-fungible token (NFT) for 2,258 ETH (approximately $6.75 million) in an auction organized by the decentralized autonomous organization (DAO), Ukraine DAO. DAOs are blockchain-based organizations governed by smart contracts that allow individuals from around the world to work together towards a common goal. In this case, the Ukraine DAO raised over $7 million in crypto donations for the war effort.
The war in Ukraine has also affected the personal use of cryptocurrencies by Ukrainian citizens. Due to the Russian invasion, nearly 6.5 million Ukrainians have fled the country, leading to difficulties in accessing their bank accounts. Cryptocurrencies have emerged as a viable alternative for these individuals who are unable to conduct cross-border transactions and open bank accounts in their new countries.
While there have been concerns about the use of cryptocurrencies for illegal purposes, such as money laundering and funding illicit activities, the examples from Ukraine demonstrate the positive impact of blockchain technology and cryptocurrencies in defense efforts. Despite Russia’s use of crypto in the war, the amount of donations received by Ukrainian organizations far surpasses that of their Russian counterparts.
The war has also accelerated the adoption of cryptocurrencies in Ukraine, with many Ukrainians embracing them and eagerly awaiting the establishment of a legal framework. The government is actively working to support the industry and create a favorable environment for its growth and development. It is expected that amendments to the tax law will be finalized soon.
Overall, blockchain and cryptocurrencies have provided significant advantages to Ukraine, strengthening its resilience in the face of the Russian invasion and garnering global support. Despite concerns about illegal activities, the positive impact of cryptocurrencies cannot be denied.
