Even before the Russian invasion of Ukraine, the lack of faith in the country’s markets and financial infrastructure made it an ideal case for the introduction of cryptocurrency, whose strength lies in eliminating the need for third-parties to verify transactions.
As mentioned by Investors Observer: “Russia’s invasion only exacerbated the problem, with many citizens fearing that money stored in savings accounts would be lost forever. With the threat of banks being destroyed, as well as the corruption rife in Ukranian society, it’s not surprising that aid initiatives in the early months of the war have gravitated towards crypto as a medium of exchange”.
In the last couple weeks, Ukraine has sought to streamline its donation process by creating an integrated platform that accepts all types of donations, including both crypto and fiat currency. As explained by Finance Magnates: “In addition to the expanded list of supported coins, the new initiative enables donors to choose where to allocate their funds, making it different from Ukraine’s previous fundraising attempts. There are currently three areas for users to choose from: defence and demining, humanitarian and medical care, as well as reconstruction of Ukraine, according to the website”.
Collected funds will be deposited to accounts at the National Bank of Ukraine assigned to the Ministry of Defense, Ministry of Healthcare, and the Ministry of Infrastructure, which will use the money to cover the most pressing needs. They will report on the distribution of the donations every week.
Netherlands-based blockchain investigative tool Crystal Blockchain announced that as of May 12, 2022, Ukraine had taken in more than $125 million in crypto donations.
Aid packages sent to Ukraine in fiat money from the United States and the European Union dwarf cryptocurrency donations, but the latter allow individuals to get involved.
BlackRock’s CEO, Larry Fink, commented in a March 24 letter to shareholders “We’ve never seen a sovereign nation fund their defense efforts in crypto before. It does prove out a lot of the crypto argument.”
Caroline Malcolm, head of international public policy and research at Chainalysis, told AFP that the conflict in Ukraine “is forcing governments to develop their understanding of cryptocurrencies and their regulation”.
She believes that such discussions can be beneficial to the crypto industry, leading to “proportionate and effective regulatory policies”.