The Ukrainian government sent a tweet asking for funds in Bitcoin (BTC), Ether(ETH) or Tether (USDT) shortly after the Russian invasion began. According to Michael Chobanian (founder of Kuna Exchange in Kyiv and president of Blockchain Association of Ukraine), the total amount received is now more than $60 millions.
These funds were not like the support pledged by countries around the globe. They were immediately available to the Ukrainian military and did not take weeks.
Individuals can use cryptocurrencies to escape crises. Lviv’s computer programmer said that Bitcoin had helped him escape the fighting. He was forced to use cash machines that were severely restricted and waited in long queues at banks to withdraw his money. He managed to transfer all of his savings to Poland and then cross the border to Poland. There he volunteers to help Ukraine win its digital war.
Russians have the ability to quickly move large amounts of money. Oligarchs as well as ordinary people are trying to find ways to move money and avoid sanctions that have hit the traditional economy. Cryptocurrencies are a part of this.
Related: The world is synchronized with Russian crypto sanctions
Does that reflect the nature of crypto? Are crypto’s inherent values neutral? Is there a way to combine the speedy digital mobility of funds in extreme conditions with the ability to impose limitations?
A large portion of the crypto community will find it poisonous to simply ask the question. Distributed ledger technology is based on the belief that no central authority can impose or maintain control in a consistent and morally acceptable manner for everyone. We live in a postmodern world where morality is subjective. My morally righteous views could be offensive or repelling to others. Even the greatest philosophers in the world have not yet found a way to reconcile this ethical disconnect. We now have cryptocurrencies that are equally accessible to charities seeking to save lives in a crisis situation as to drug cartels and arms dealers, as well as gangsters.
Closed user groups are one way to address the question of crypto values. It is possible to create new crypto tokens, and decentralized autonomous organisations that can operate them. These organizations will embody the values and beliefs of their founders and participants. Klima token is an example of the belief that continued carbon emissions are harmful to society and the environment. It aims to increase the cost of carbon offsets, and then permanently remove them from sales once they are applied to a project.
Related: DeFi: What, who, and how can we regulate in a code-governed, borderless world?
Closed user groups can be avoided. There are many other cryptocurrencies that have a neutral view of the Ukraine-Russian conflict. These tokens are neutral in value and will not be affected by any changes.
Already, crypto regulation is having an impact
There is much more that could and should be done. NexPay, a European-regulated financial institution acts as an off-ramp that allows companies to convert digital assets (such as crypto tokens) into fiat currency, and then send it to their bank accounts. Because fiat currency is still the most common method of transacting real-world business transactions. While crypto is rapidly maturing, the global value of the cryptocurrency markets is approximately $2 trillion, compared to $1.3 quadrillion for the fiat economy.
Despite being the wild west of finance and its reputation, crypto regulation can be seen. Anyone who has attempted to open a crypto account knows that it is difficult and there are many regulatory hurdles.
Related: Control, identity and self-custody: How regulators went wrong
The regulators are not slow in expressing their opinions on crypto’s ability to bypass sanctions during the current conflict. A group of Democrats from the influential Senate Banking Committee expressed concern that cryptocurrency could be used in order to evade sanctions. The Financial Conduct Authority in the United Kingdom has “reach out to every crypto firm registered with them to ensure they are aware of sanctions, their responsibilities”, and is monitoring the situation. Christine Lagarde, president of European Central Bank, has urged the European Union to urgently improve its Markets in Crypto-Assets regulations (MiCA), in the wake the Russian invasion.
Some jurisdictions have already given regulators the power to add people, like Russian oligarchs to lists of sanction-prohibited or politically vulnerable persons. Businesses that fail to comply could face large fines and reputation damage, as well as possible revocations of operating licenses.
Many large crypto exchanges now enforce sanctions, whether it is because of these pressures or their ethical position. They argue that a blanket ban would be detrimental to ordinary Russians, and they are resisting calls for one. Then there is the argument that people will find other ways to get rid of sanctions. Changpeng Zhao CEO of Binance stated, “If people want sanctions avoided there are always multiple methods.” “You can do it using cash, using diamonds, using gold. “I don’t believe crypto is special.” This view ignores the digital nature cryptocurrencies which make it much simpler and quicker to move funds than traditional physical assets.
This war has not been won by the regulators. They are however tightening their grip on ways to circumvent crypto-sanctions. Our experience shows that regulation of crypto assets is not moving in the right direction.
Related: Does the Ukraine War increase regulatory pressure on crypto-firms?
It is not going to be a perfect system that allows money to go where it is needed and prevents bad actors from using them. The world will never agree on who the bad actors are — just look at the problems the United Nations has with this. In a case like the illegal invasion by an independent country, however, we can and should continue to use the power of cryptocurrency and appropriate regulation to help refugees rebuild their lives in new places and stop financial flows to people and countries that appear to be engaged in geopolitical aggression.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
NexPay is a Lithuanian fintech startup that provides banking infrastructure for digital assets. Uldis Teraudkalns serves as its CEO. Uldis has over a decade of experience in finance and venture investment management, including serving on various boards. Uldis is a graduate of the Stockholm School of Economics in Finance and co-hosts The Pursuit of Scrappiness. This podcast is focused on startups and business in the Baltics.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.