On February 26th, Twitter accounts of Ukraine’s Government posted a plea for donations in crypto assets. According to Elliptic, a blockchain analytics platform, a total of $60 Million worth of crypto assets have been received as donations. Alex Bornyakov, the Deputy Minister of the Ministry of Digital Transformation, has also acknowledged that Crypto has been […]
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On February 26th, Twitter accounts of Ukraine’s Government posted a plea for donations in crypto assets. According to Elliptic, a blockchain analytics platform, a total of $60 Million worth of crypto assets have been received as donations. Alex Bornyakov, the Deputy Minister of the Ministry of Digital Transformation, has also acknowledged that Crypto has been helpful for Ukraine amid Russia’s invasion.
Many Ukrainians whose access to bank accounts has been restricted are moving to Crypto as an alternative to the current financial systems. Even before the crisis hit, Ukraine was already trying to adopt Crypto. Ukraine’s parliament had already passed a law in February legalising Crypto. Ukraine ranks fourth in crypto adoption across the world. Thus, in an environment where Ukraine’s National Bank was not operating efficiently, people could use Crypto to make quick transfers and deliver immediate returns.
The Ukrainian Government expects the donations to reach $100 million soon. A Ukrainian NGO, Come Back Alive, has also received donations, which supports the military. Come Back Alive received a significant donation from a Decentralised Autonomous Organisation (DAO) named UkraineDAO. The Ukrainian DAO donated the proceeds of the NFT Sale of a Ukrainian Flag amounting to $6.5 million in ETH. This NFT sale lists it as the 10th most expensive NFT ever sold.
While many donations have been received from Companies and Start-Up founders, most donations come from ordinary people. For instance, Binance, the largest crypto exchange, has pledged $10 million as a donation. Most of these donations have been received in Ethereum, Bitcoin and US Dollar backed Stablecoins. It has also received millions of NFTs, and one of them is the coveted CryptoPunk NFT. Though these donations do not significantly impact the Nation’s broad economy, they have been essential during the conflict.
To raise additional funds, the Ukrainian Government is working with two companies to design an NFT Collection. Whether the NFT will be a limited edition or not is still being worked upon.
Deployment of funds donated.
The crypto assets have been beneficial in funding the resources required for the armed forces. $15 million has already been spent on military supplies. The Ukrainian Army has received close to 4,00,000 packed lunches, 5,500 bulletproof helmets, 500 helmets, 500 vests, more than 3,000 thermal imagers and optics and 60 walkie-talkies. The suppliers are mainly from the US and Europe. Around 40% of these suppliers agree to accept crypto payments, and for the others, Crypto is converted to Dollars or euros.
Donors must exercise caution before making donations to crypto-wallets to avoid potential scams. Organisations like The Giving Block have a vetting process before anyone is listed on the platform for donations. None of the wallet addresses circulated on social media should be trusted without finding out the details.
The use of crypto assets in Ukraine demonstrates the benefits of this technology: It’s an instant, international fundraising initiative where vast sums of money, unaffected by the restrictions of the bureaucracies, have been transferred to local institutions quickly. Yet, there are drawbacks, too.
Bitcoin and ether can be undeterred by institutional restrictions, and there can be both good and bad sides to this. The USA and European Union have levied sanctions against Russia’s financial institutions, exports, critical industry and government personnel. When the economy is in bad shape, President Vladimir Putin would be compelled to sit on the negotiation table. However, this impact could be reduced if crypto assets circumvent such restrictions.
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