How are Cryptocurrencies Aiding Ukraine’s Fundraising Efforts against Russia?
Cryptocurrencies have played a pivotal part in the battle in Ukraine, assisting the government in raising millions of money to resist the Russian invasion.
Why has Ukraine resorted to cryptocurrencies, and how is the embryonic cryptocurrency business altering its image and making an effect despite the turmoil?
What is the total amount of cryptocurrency that has been raised?
Ukrainian government released addresses for two crypto wallets on their Twitter account at the start of the crisis, offering donors a direct and obvious address to which to make donations.
Only four days after the invasion began, the wallets gathered more than $10.2 million (9.2 million euros).
Since then, more than $100 million in cryptocurrency has been raised, with Michael Chobanian, the founder of the Ukrainian crypto exchange Kuna, responsible for 60% of all donations.
“We’re still gathering cryptocurrency. It will be used to purchase items like as daily meals, bullet-proof jackets, and helmets “AFP spoke with the 37-year-old Ukrainian.
Initially, two funds were established, one for humanitarian objectives and the other for military support in Ukraine.
The funding was pooled and focused only on assisting the military once the fighting in Ukraine increased, according to Chobanian.
The bulk of crypto contributions, according to him, came in the form of Bitcoin, Ethereum, and Tether, a stablecoin tied one-to-one to the dollar.
What Are The Advantages Of Making A Crypto Donation?
The amount of fiat money provided to Ukraine by the US and the European Union dwarfs cryptocurrency donations, while the latter allows people to participate.
“The Giving Block,” a US crypto charity, told AFP that bitcoin donations had the potential to attract “younger contributors” wanting to support a variety of causes.
Crypto contributions are also valuable to Ukraine since they are unaffected by geopolitical or macroeconomic concerns. Inflation has caused the value of the Ukrainian hryvnia to depreciate, according to Chobanian.
The speed of the transfers is an additional benefit of contributing to bitcoins. Validation of bank transfers between two countries might take up to 24 hours. Cryptocurrency transactions, on the other hand, are usually faster.
What are the disadvantages?
Despite crypto’s success in assisting the Ukrainian war effort, it hasn’t always been easy.
The deputy minister for digital transformation planned to create Ukraine’s own cryptocurrency as a symbolic gesture for Kyiv’s cause in the early days of the conflict, but the initiative was finally shelved.
To make matters worse, others took advantage of the chance to produce and sell counterfeit copies of the government-issued cryptocurrency.
Chobanian, who now works closely with the ministry, claimed there was a “lack of communication” inside the administration.
He recalls, “It was the first day of the battle.”
Furthermore, cryptocurrencies have become an important element of Ukraine’s shadow economy, where they are utilized as a means of trade in cybercrime, tax evasion, and capital flight.
Transactions from Eastern Europe to other countries are notably high, according to data analytics firm Chainalysis, and the business argues that “capital flight” may explain some of the crypto movement in the region.
What Are The Repercussions?
Despite the concerns, Chobanian believes that cryptocurrency will become an important element of the Ukrainian economy.
“We will use blockchain technology to reconstruct Ukraine once we have won the battle. Crypto has a positive impact on all of us “he stated
Chobanian’s ambitions are lofty, yet they are grounded in reality.
President Volodymyr Zelensky signed a measure on Wednesday that establishes a legal framework for crypto platforms and users to operate in Ukraine.
The situation in Ukraine, according to Caroline Malcolm, head of international public policy and research at Chainalysis, “is driving governments to expand their knowledge of cryptocurrencies and their governance.”
Such dialogues, she says, can benefit the crypto business by resulting in “proportionate and effective regulatory rules.”
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