The world is still struggling to understand the geopolitical and human impact of the Ukraine war. With more than 10 million people fleeing their homes and 6 million seeking refuge in foreign countries, it was time to support a sovereign country under attack.
It also proved to be the moment where cryptocurrency proved its true value to real people. Not as the high-concept tech toy for the wealthy elite, as many have previously dismissed it as, but rather as an empowering force for good in a dangerously unstable world.
When the Russian invasion began in February, Twitter accounts belonging to the Ukrainian government posted pleas for crypto-assets. Now, like more than $100 million in crypto donations have already been raised to support the Ukrainian resistance, those of us who championed crypto as a way to give ordinary people rather than corporations and governments control over their own money have been vindicated. While the banking financial system has been under sustained attack by Russia, using both military and cyber attacks, this life-saving money has gone directly to those in need through crypto.
Ukraine has taken a number of measures to stabilize the banking sector and protect the country’s economy, including suspending foreign cash withdrawals, limiting how much currency can be withdrawn, and banning cross-border currency transactions. Consequently, Ukrainians are turning to limitless and trustless crypto to enable them to either survive in or flee the war zone.
Related: The Ukraine invasion shows why we need crypto regulation
We can now see the value of having somewhere safe to store money at a time when the traditional financial system is under threat – a completely separate payment infrastructure that can step in and pick up the slack if the current infrastructure is destroyed in a black swan event. . Whether it’s a state destroying our ability to pay for goods and services or even a major cyber attack, the blockchain provides an essential backup to stop the destruction of entire economies.
We’ve seen digital currencies used to quickly transfer cash to those in need from relatives abroad, enabling fleeing refugees to buy crucial goods and services when there’s no cash in their ATMs after critical infrastructure has been decimated by relentless Russian attacks. Anyone with a cell phone and internet access — which has been boosted by the thousands of Starlink satellite internet dishes generously provided by Elon Musk’s SpaceX — can access their finances through crypto wallets.
Crypto avoiding sanctions? Think again
Digital currencies have not only shown their value in helping desperate Ukrainian refugees but also preventing sanctions from being circumvented. Contrary to speculation at the start of the conflict, desperate Russian oligarchs have discovered that crypto is not the safe haven for their funds they had hoped for.
As the UK’s independent crypto industry association, we have called on all our members and the wider crypto community to take all necessary steps to enforce economic sanctions against Russia by engaging with professional enforcement teams, blockchain analytics companies, the National Crime Agency and government experts. in illegal finance.
Contrary to the outdated image of crypto as a digital currency favored by criminals, every transaction on the blockchain is, in fact, publicly available, providing a secure and transparent record on a ledger that anyone can see. This publicly available information means that exchanges can use transaction monitoring tools to trace the source of the funds and flag what comes from blacklisted, sanctioned sources.
The list of blacklisted addresses is in the public domain, which means that exchanges can not only identify and block approved names but also prevent them from opening accounts in the first place.
While there was almost no evidence that Russia was significantly using crypto to evade sanctions, Ukraine was actively using crypto to do tremendous good.
Crypto donations for Ukraine reached about $100M, helping Ukrainians defend against Russia’s invasion. pic.twitter.com/v8Xygx85OM
– Senator Pat Toomey (@SenToomey) March 17, 2022
Lack of liquidity
Contrary to some speculation, if Russia wanted to avoid sanctions by converting fiat currency into crypto today, it would be extremely difficult because there is insufficient liquidity in the market to support exchanging its fiat for cryptocurrency at a sufficient scale.
If an oligarch tries to convert $1 billion into crypto, they would find that this vast amount of digital currency is simply not available in one place because it is spread across thousands of markets.
Building digitally from scratch
The legacy systems on which our financial markets stand are not going anywhere, and quite rightly so, as governments around the world value the safety, predictability and security they offer. But if we could start from scratch, we would probably turn to blockchain technology, which is at the forefront of financial technology thanks to its superior efficiency. It eliminates all intermediaries, reduces the time to settle, increases the global reach for sending payments and reduces costs.
Related: Ukraine has received $37M in tracked crypto donations so far
Major payment providers that connect the banking world with merchants have already embraced crypto, providing the ability to pay with digital currencies as an alternative to credit card payments. The cost of these transactions has increased significantly in recent years, and if a company turns over tens of millions of dollars a year, 2% is a lot of money. If they have another way to pay using crypto for a fee less than 1%, it’s a better option.
Ukraine’s financial infrastructure can emerge from this tragic war at zero, and we may soon see a modern society rebuilding its economy with a strong blockchain technology element built into it. challenge and has proven to be an essential source of both financial stability and accountability.
The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Ian Taylor is the executive director of CryptoUK, an independent industry body that exists as a cohesive, credible voice for the evolving United Kingdom digital assets industry. Having spent 20 years in investment banking, he has held many senior roles across trading, treasury and risk management, and continues to be involved with a major global bank. In his role he has built a community of over 100 of the most influential industry participants and campaigns for an appropriate regulatory framework in the UK, Europe and beyond.