Ukraine and cryptocurrency... Lifeline for fundraising under bombing


The use of cryptocurrency in Ukraine has been growing rapidly in recent years, with more and more businesses and individuals using it as a way to fundraise under the country’s current conditions of bombing and sanctions.

Since the start of the conflict, over two million people have been displaced, with many more living in fear for their safety. The Ukrainian government has been unable to effectively raise funds to support those affected by the conflict, leaving many.

  • Since Russia's invasion of Ukraine in late February, the country has received nearly $900 million in donations. A large portion of these funds has come in the form of cryptocurrency, which has helped Ukraine to keep its economy afloat.

  • According to Bornyakov, the country has spent about $34 million of the cryptocurrency it has received, converting 80% of it into traditional currencies. The remainder is being used with merchants that already accept cryptocurrency. This influx of cryptocurrency has been a lifeline for Ukraine, allowing it to continue to fund its essential infrastructure and humanitarian activities.

Ukraine and cryptocurrency... Lifeline for fundraising under bombing
Ukraine and cryptocurrency... Lifeline for fundraising under bombing

Mikhailo Fedorov was just 28 years old when he was appointed to head Ukraine's newly created Ministry of Digital Transformation in 2019 where he was tasked with leading the country's paperless revolution

According to a special report by the newspaper "The Independent", Fedorov would not have known that Russia's invasion of Ukraine, less than three years after taking office, would throw the country into chaos and endanger the banking system, which prompted the young minister to call for legalization Instant-on cryptocurrency

Since then, more than $100 million in cryptocurrency has been amassed, according to the ministry statement, so what was once an illegal currency is now a vital asset in Ukraine's resistance to a Russian invasion

What started as a social media invitation for cryptocurrency donations quickly became a neat and easy-to-use website with an attractive hashtag and slogan under the headline “Help Ukraine, don’t leave us alone with the enemy,” and contains links to send different coins, or transfer traditional cash to a collection account Donations to the country's central bank.

Donations to the government's cryptocurrency have flowed through several cryptocurrencies, including Bitcoin, Ethereum, Tether, and even the often mocked Dogecoin.

The London-based blockchain analytics provider Elliptic said the donations included a single transaction worth $1.86 million that appeared to come from proceeds from the sale of NFT (a non-fungible token).

A non-fungible token (NFT) is a unique and irreplaceable unit of data stored in a digital record (blockchain), and NFTs can be used to represent easily reproducible items such as images, videos, audio, and other types of digital files as unique items (similar to a COA). Using Blockchain technology to create public and confirmed proof of ownership. Copying the original file is not limited to the owner of the NFT, and can be copied and shared like any file, and these tokens are distinct from other cryptocurrencies such as Bitcoin that they are not replaceable.

Elliptic Group warns it has identified fraudulent crypto fundraising

  1. But the Elliptic group warned that it had identified fraudulent crypto-money-raising, noting that some hackers and scammers may take advantage of the situation and "deceive people who want to donate to Ukraine"
  2. But this has not stopped the money from flowing in. According to the Ministry of Digital Transformation, donations in the cryptocurrency have contributed to supporting humanitarian aid programs and the Ukrainian armed forces.
  3. Part of the donations will remain digital, while others will be converted into (traditional) money and transferred to the National Bank of Ukraine, according to the ministry.
  4. “Every helmet, flak jacket, and night vision device saves the lives of Ukrainian soldiers,” Fedorov, who is also the deputy prime minister, explained on the ministry’s website, and thus “we must continue to support our defenders. A big thank you to everyone in the crypto community for supporting Ukraine.”.
  5. Less than six months ago, Ukrainian President Volodymyr Zelensky vetoed a law legalizing crypto passed by parliament arguing that creating a new government agency for cryptocurrency would be too costly.
  6. But tough times call for drastic measures. On March 16, Deputy Minister for Digital Transformation, Alex Bornyakov, announced that Zelensky had signed off on the legislation on digital assets.

Bulgakov: “Cryptography is now legal in Ukraine

"Crypto is now legal in Ukraine... Thank you President for your support. We believe that the cryptocurrency industry offers new economic opportunities, and we will do everything we can to achieve a bright new future as soon as possible," Bornakov said in a tweet.

But it is not only the country that is set to benefit from the move toward cryptocurrency, Ukrainians who have been looking for alternative banking systems, especially during the war, are likely to welcome the legalization of digital money.

“During war situations like what is happening in Ukraine, banking services will be disrupted and will not work as usual,” said Abdul Rahman Babir, founder of Cordcoin, a cryptocurrency exchange in the Kurdistan region and Iraq.

Balbir himself witnessed the need for cryptocurrencies across Iraq and Kurdistan when the terrorist organization ISIS seized control of large swathes of Iraq in 2014, pushing the country into war with the participation of an international coalition to eradicate the extremist group.

He told The Independent: "A lot of people with money in banks had problems because they couldn't withdraw the money."

According to Baber, “It has become quite clear that many people cannot trust banks with their money and prefer fiat currencies, due to the fact that they are easily stored in their own phones, making it a reliable way to preserve material value better than if you put it in a bank account that you do not control.”.

However, Ukraine's Central Bank Governor Kirillo Shevchenko reassured his country's citizens earlier this month during an official statement that the country's banking and financial systems are still functioning.

  • The central bank, he said, "is doing everything necessary to ensure the continuity of cash and non-cash payments and the smooth operation of the state's banking system under martial law."

  • For the cryptocurrency community in Ukraine, the best way to move the economy forward is digital, and if implemented correctly it will last long after the war with Russia is over.

  • "When we win the war we will rebuild Ukraine using Blockchain technology, cryptography has helped us all," the founder of the Ukrainian Crypto Exchange Kona, Michael Chobanyan, told AFP.

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