Introduction
It’s been about a month since the Russian invasion of Ukraine, and it has caused infinite destruction, devastation, and humanitarian crisis. The Russian economy is in turmoil. The demand for bitcoin is high in the war conflicted area as the fiat continues to depreciate its value.
Common citizens of both countries are in panic mode. They are trying hard to save their wealth and as expected crypto exchanges have seen a massive surge in their trade volumes.
Cryptocurrency is in the headlines. The question is being asked, Can Russia evade SWIFT sanctions with cryptocurrency?
What’s the mindset of people during war? How Ukrainians are using crypto to their aid? What are the opinions of major crypto exchange CEOs on freezing Russian users’ accounts? Can Russia avoid sanctions using cryptocurrency? Too many questions, let’s figure it all out.
Money & Mindset during Russia-Ukraine Crisis
In times of war, people are agitated, stressed, and dethroned from their very homes. Their hard-earned money takes a toll of uncertainty. Some citizens leave the country, while some cannot. Some willingly join the war to fight for their motherland, while others are forced to do so. Immigrants, poverty, uncertainty, destruction, stress, chaos have increased, and worst of all the economy is deep in turmoil.
Like other markets, it was expected for Cryptocurrency to take a similar downtrend, but we were all flabbergasted. Bitcoin recovered quickly and so did other crypto coins. The volatile cycle of bitcoin continues its run between 35000 dollars to $45000.
And when the economy hits hard during difficult times of war, citizens need assets that are easily tradable or convertible into cash. To illustrate- for a Ukrainian, real estate may not come in handy when he/she is fleeing the war zone, his/her money in a bank account could pose similar problems as ATMs usually run out of cash.
During these times, a citizen of a conflicted country prefers his/her money, assets in their safe hands and not in banks. So assets like gold, other precious metals, cryptocurrency, or physical cash would be preferable when leaving a war-affected zone.
And as for cryptocurrency, Russia-Ukraine, have seen a massive surge in their usage as it’s easily acceptable, convertible, and accessible. Ukrainian crypto exchange, Kuna has seen the highest trading volume since May 2021. While similar was the story for rouble to crypto conversion.
How crypto has helped Ukrainians in a time of desperation changed the approach of not only Ukrainian officials, but also its citizens and people from all across the globe.
Raising funds via Crypto was fast and transparent. The crypto donated to Ukraine was traceable, leaving no room for corruption. Somewhat, the idea of Cryptocurrency was for this kind of uncertain time, and it delivered how Satoshi might have wanted.
Russia-Ukraine crisis: How Ukrainians are using Crypto to their aid?
Oleksandr Bornyakov, an official at the Ukraine digital ministry, said, “Crypto assets proved extremely helpful in facilitation of funding flows to Ukrainian citizens and soldiers, as well as in raising awareness and engaging people worldwide.”
Ukraine’s government has raised $65 million+ in crypto assets like Bitcoin, Ethereum, Dot, USDT, and Dogecoin, according to their official donation website. And they expect to reach 100 Million milestones soon, as per their Vice prime minister tweet.
On 27th February, Crypto exchange Giant, Binance pledged to donate $10 million for Ukraine humanitarian crisis.
Earlier, Ukraine was raising Crypto funds by sharing their wallet address directly on Twitter. However, on 14th March, after partnering with FTX, Ukraine started a public website to receive Crypto donations. Sam Bankman Fried, the CEO of FTX, airdropped 25 dollars to every of its user in Ukraine.
Polkadot founder Gavin wood pledged to donate 5 million in $DOT if the Ukraine government adds a Polkadot wallet address. He took backlash from Twitter users upon asking to do so. However, the Ukrainian government didn’t shy away to act upon his request, and Gavin wood kept his word.
According to Alex Bornyakov, Ukraine has used its $15 million in crypto assets to buy bulletproof vests, night vision devices, gas, helmet, and other military equipment.
To take a step further, the Ukraine government released an NFT Collection called Meta History: Museum of War. It’s a collection of everyday war news, related graphics in chronological order to spread truth, and awareness in the digital community and raise more funds. NFTs are blockchain-based digital assets that took off last year, and it proves a better way to raise funds as well.
Russia-Ukraine Crisis: Can Russians evade sanctions imposed with cryptocurrency?
The Russian rouble is deep in turmoil after invading Ukraine. Rouble— a Russian fiat whose value has depreciated to less than an American penny.
Western businesses are shutting down in Russia. MNCs like Microsoft, Apple, Samsung, HP, Intel have stopped sales and production in Russia. Netflix, TikTok won’t allow new users.
Visa & MasterCard used to process 74% percent of Russian transactions, is now blocking Russian banks. Apple pay, Google pay and Samsung pay disabled their transactions in Russia.
These harsh sanctions have affected the Russian economy and its common citizens. ATMs are out of cash. Russians cannot intake their salaries or bring their money from foreign countries.
And SWIFT sanction is the final nail into the coffin. Russian citizens are left none than to panic. Common citizens are hoarding electronic devices like laptops and smartphones in hope that they won’t lose their value as rouble continues to fall.
Russia being the biggest exporter of Natural gas and the second-largest of oils plans to receive payments in Bitcoin after being affected adversely by SWIFT sanctions.
Some Fears, that Russian oligarchs might evade sanctions by swapping their dying rouble into crypto, as Russia has seen an increment in its crypto trade volume past month. But these are just normal citizens who are trying to save their hard-earned money as rouble fails to recover.
Crypto exchange behemoth, Binance CEO believes, crypto is too small for Russia. Only 3% of the total population trades their savings. And only 0.3 percent of the world’s total net worth is in crypto, and so, these numbers apply to Russians as well.
Binance, Coinbase, and Kraken CEO take on Russia-Ukraine War & Crypto sanctions
“We differentiate between the Russian politicians who start wars and the normal people, many normal Russians do not agree with war,” said, Chanpeng Zhao, founder of Binance, the behemoth of Crypto exchange.
Later on Binance blog, CZ clarified: Unilaterally freezing millions of innocent Russians’ accounts is unethical. Compared to how bad it would be if a Parisian café stops serving coffee to Russians or worse they seize their wallet.
There are way too many (10k+) smaller exchanges, and switching between exchanges is effortless. Those who don’t use crypto have a difficult time understanding it as well. One doesn’t need an Exchange. Instead, they can download open-source wallet software and start receiving crypto for the services they sell.
At last, he mentioned in the blog, any day, traditional financial services are more prone to accommodate money laundering than crypto ever would. Cryptocurrency is public and easily traceable. For example- look at Bitfinex 3.6 billion BTC hack.
Brian Armstrong, the Coinbase founder, said in a Twitter thread, “We believe everyone deserves access to basic financial services unless the law says otherwise.”
He refuses to unilaterally ban Russian Coinbase accounts. Instead, he is ready to comply with the US government sanction instruction, if asked to do so.
The Chief legal officer of Coinbase, as mentioned in the blog, said they have banned 25000+ Russian accounts on suspicion of illicit activities. And have forwarded the wallet address to the US government for further investigation.
Jesse Powell, the founder of the Kraken, tweeted, the Russian invasion of Ukraine has nothing to do with common Russian citizens, who may not even agree with its government actions. Similar to Coinbase’s CEO, he also agrees to freeze Russian accounts if asked to do so by the US government.
Can Crypto be a Safe Haven during the Russia-Ukraine war?
Richard Usher of BCB group (a financial institute in London) believes bitcoin is not seen as a safe haven, nor it should be. It should be known for its limited supply cap, credit-free, digital bearer asset that proves to be a better alternative to traditional financial systems.
Despite its volatility, we have seen a huge amount both of Russian Rouble and Ukrainian Hryvnia conversion in cryptocurrency. Many preferred crypto with a high market cap, while others secured their hard-earned money with stable coins like Tether USD.
Two Danish Reporters stuck in Ukraine shared their story, told, how having crypto facilitated their way out of war zone. It was a way to avoid mayhem, better than fiat or other assets.
Bitcoin- is often referred to as digital gold. Has the time come for it to take a safe haven spot? We might not know yet, but it’s a better alternative out there than most.
Final thoughts on Crypto amidst Russia-Ukraine war
We might never know when Russia will end its inhumane invasion of Ukraine. We should all stand for peace. War should never be an option.
Western countries have imposed sanctions to paralyze Russia’s economy. People from all over the world have donated to Ukraine. And as have other countries, India also stands with innocent Ukrainians by sending help, humanitarian aid, and other important relief supplies.
The Crypto community showed up, Bored ape Yacht Club donated a little over $1 million in Ethereum (388.999) after being inspired by its community donation to Ukraine. And in general, over $65+ million have been raised in cryptocurrency to support innocent Ukrainians.
And you can also help by donating crypto like Bitcoin, Tether, Ethereum, Dogecoin, Polkadot, and Solana to affected Ukrainians by visiting their official website. Donations via banks are also open, and details can be found on the same website.