“There is no good in times of crisis, only the best course of action given the circumstances.”
We are witnessing a war in the crypto age. So, which side does digital money serve in the war between Russia and Ukraine? The answer is very clear: to both… Experts commented on its reflection on prices, saying that the use of cryptocurrencies will become widespread with this war…
Are cryptocurrencies good or bad in the context of the Russian invasion of Ukraine? It is quite a difficult question to answer. Cryptocurrencies plus part of the global financial system. This became more apparent as Russian forces invaded Ukraine. Millions of Dollars in crypto donations were made to support the Ukrainian military. Even the Ukrainian government is currently requesting Cryptocurrency donations and has already raised $15 million. Some Ukrainians are turning to cryptocurrencies as an alternative to financial institutions that limit people’s access to bank accounts and foreign currency.
Speaking to Vox, Alex Gladstein, chief strategy officer of the Human Rights Foundation, said, “The fact that it cannot be frozen, cannot be censored is the most important reason why Bitcoin is such an important humanitarian tool.”
On the other hand, how useful a crypto exchange is for people in crisis or organizations in need of donations is open to debate. Using cryptos requires a relatively sophisticated understanding of technology, and if you’re not ready for it yet, the start of a war may not be the right time to try it.
Also, all of the factors that make cryptocurrencies attractive to the besieged also apply to the invaders. Cryptocurrencies can be used by Russia to evade sanctions, which is currently the main weapon used by the US and its allies against Russia. At the same time, such periods can also make people who hold cryptocurrencies a target for cyber attacks.
Ukrainians use cryptocurrencies
As the Ukrainian economy collapses with the effects of the war, people are choosing cryptocurrencies as a way to hide their wealth. The country’s central bank has already suspended cash transfers and prevented Ukrainian citizens from withdrawing foreign currency. Ukrainian cryptocurrency platform Kuna saw more than three times its daily volume, reaching its highest level since May 2021.
Using cryptocurrencies in the middle of a crisis isn’t always easy. First, you need an internet connection and a working device. It is also necessary to know how to use crypto tools, something that cannot be grasped quickly in times of crisis. There are thousands of cryptocurrencies and not all of them work the same.
Expressing that this war will cause cryptocurrencies to be used more widely, Cryptocurrency Specialist Oytun Es said, “However, this is a process. As people see such developments, they will understand the importance of cryptocurrencies much better. Right now, many people look at cryptocurrencies with the logic of ‘put on one and get ten’.
However, cryptocurrencies are not only assets created to make money, but also assets created to protect the value of your money. People will understand that during such processes, Bitcoin was produced to protect the value of their money. He emphasized that it is an entity that serves its purpose in a clear way at the moment.
Due to the demand, they did not buy Tether
Even wealthier Ukrainians are currently struggling to buy Tether, a digital currency pegged to the US dollar. While the trading volume on crypto exchanges in the country increased rapidly, the huge demand for USDT caused the asset to be traded at a premium of $0.11.
In February, the country’s parliament passed a law ‘legalizing’ crypto, and Ukraine ranks fourth in the world in terms of cryptocurrency adoption, according to blockchain research firm Chainalysis.
As the occupation continues, supporters of Ukraine are sending even more cryptocurrencies to the country. On social media platforms, people share their crypto wallet addresses and solicit donations, including the nation’s crypto industry leaders. An NGO supporting the Ukrainian military has reportedly raised several million cryptocurrencies, and groups have used crypto to purchase a wide variety of military equipment, medical supplies, and even a facial recognition app.
Russia can benefit from cryptocurrencies</h3J
Even before the Russian invasion of Ukraine, the US government was concerned that cryptocurrencies could lessen the impact of economic sanctions. According to research from blockchain analytics firm Elliptic, Iran is using Bitcoin mining to circumvent trade embargoes. Russia may also be using cryptocurrencies to evade sanctions.
Stating that the sanctions will have positive repercussions on cryptocurrencies, Es said, “The Russian state has made statements about cryptocurrencies that can have very different meanings in the last period. First, the head of the Central Bank of Russia made a statement advocating a complete ban on cryptocurrencies.
Then, Putin softened these words a little more and said that action should be taken according to the developments. Finally, the Russian Prime Minister made a positive statement about cryptocurrencies. Of course, when these statements were coming, the war had not started yet, but the Ukraine crisis was continuing.
Presumably, Russia was waiting for economic sanctions to be imposed on itself after its own war steps, and this is the reason for the positive action regarding cryptocurrencies. But Russia’s serious embrace of cryptocurrencies will force the states in terms of regulations. I can say that in parallel with the increase in the use of cryptocurrencies, the regulations may become tougher.”
Eurasia Blockchain and Cryptocurrency Research Association President Kadir Kurtuluş, referring to the speeches that there may be a sanction for cryptocurrencies, stated that there can be no special sanction against Russia since the existing cryptocurrencies are decentralized and added:
“If such an action comes from cryptocurrency exchanges, it will be an intervention in the decentralized area. All such interventions in a decentralized area will negatively affect cryptocurrencies.”
Exchanges rejected calls
To avoid this scenario, Ukraine’s deputy prime minister and minister of digital transformation, Mykhailo Fedorov, has called on crypto and blockchain platforms to block addresses of Russian users. The Biden administration is also considering how to impose sanctions on Russian crypto assets and is urging crypto exchanges to ensure that individuals and entities subject to sanctions from Russia do not use their platforms.
“I ask all major crypto exchanges to block addresses of Russian users. It is very important not only to freeze addresses associated with Russian and Belarusian politicians, but also to sabotage ordinary users.”
While cutting off Russia’s access to cryptocurrencies could have real consequences for the country, it has also become increasingly popular in Russia, the world’s third-largest Bitcoin miner. Many exchanges have rejected calls to freeze Russian accounts.
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