The role of crypto in wartime support for Ukraine | Opinion
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It’s been two years since the full-scale Russian invasion of Ukraine, and the war is still ongoing. Ukraine is still fighting for its freedom, democracy, and independence. In these challenging times, we have seen the use of new technology changing the landscape, both on and off the battlefield. Cryptocurrency and web3 technologies have emerged as significant tools in Ukraine’s arsenal of support. As a Ukrainian and a crypto enthusiast and entrepreneur myself, this topic profoundly resonates with me. Inspired by the resilience and innovation of Ukraine’s defenders, I want to show how crypto has made a tangible difference in these historic times.
Unprecedented support from the web3 community
Since February 2022, the global web3 community has rallied behind Ukraine, providing financial aid and resources crucial to the country’s defense efforts. High-profile contributions, such as Binance’s $10 million donation and Vitalik Buterin’s $5 million in Ethereum (ETH), exemplify the crypto sector’s capacity to mobilize resources rapidly.
These acts of generosity, coupled with initiatives like Binance’s Refugee Crypto Card and educational support, highlight an overwhelming wave of support rooted in the web3—decentralized empowerment ethos.
The support has not been limited to financial donations. Ripple, Cardano, and Polkadot co-founder Gavin Wood, among many others, have made significant contributions, demonstrating the industry’s united front in aiding Ukraine. This collective effort not only provides immediate relief but also cements the role of cryptocurrency as a tool for geopolitical and humanitarian response. These and countless other donations were made through crypto and have been especially helpful during the first months of the war. International money transfers have incredibly high fees and take a long time to complete. Crypto donations still keep flowing to this day.
Blockchain’s role in Ukraine’s resilience
Ukraine’s adoption of blockchain technology has been nothing short of revolutionary in its war efforts. Creating official crypto wallets for donations illustrates a forward-thinking approach to maintaining sovereignty and operational integrity.
Furthermore, using NFTs to document and immortalize the harsh realities of war crimes speaks to the innovative ways in which web3 technologies are being leveraged for justice and historical preservation.
Initiatives like the $6.7 million raised by UkraineDAO for an NFT of Ukraine’s flag provide a new template for fundraising and awareness in the digital age. I have also been personally involved in the UACatsDivision NFT collection, raising $370,000 for our defenders.
Crypto is the new cash
Ukraine is ranked fifth by the Chainalysis report on the world’s crypto adoption index. From the start of the full-scale invasion, people quickly learned about crypto and started using it—the definition of grassroots growth.
Over 6 million people fled the country, and 7 million more were displaced internally, all trying to escape from Russian aggression. All those people had to leave their homes, their belongings, and assets behind. Carrying all your life savings in cash was dangerous, and we didn’t know if the banks would survive (there have been dozens of cyberattacks on Ukrainian energy, finance, and telecommunications infrastructure). So, people turned to crypto as a safer alternative that works cross-border. In my opinion, crypto is the new finance. It allows you to use your money however you want anywhere in the world. Today, crypto has become cash in Ukraine.
Despite the overall decrease in transaction volume in 2023, the granularity of transaction data reveals resilience among various segments of the crypto market. While large institutional transactions have slowed down, smaller institutional and professional-sized transactions have displayed relative stability, and retail transactions have remained consistent. This pattern indicates a sustained commitment to cryptocurrencies among a broad spectrum of users, from small institutions to individual retail investors.
The impact of defi on the lives of Ukrainians
A lot of Ukrainians are displaced and cannot have access to the stock markets and loan markets. Here, the highly accessible defi system makes an impactful change.
A particularly positive development within Ukraine’s crypto landscape is the growth in defi activities, which saw a 3% increase in 2023, making it one of the few regions to experience such growth. This uptick in defi utilization may be attributed to the heightened uncertainties around regional regulations and the instability of centralized financial institutions. The non-custodial nature of defi offers users more control over their funds, making it an attractive alternative during times of crisis and market volatility.
Despite the challenging conditions, the enduring interest and engagement with cryptocurrencies in Ukraine and across Eastern Europe highlight the potential of digital assets to offer accessible financial services. While traditional financial markets remain out of reach for many, the stability and growth of defi systems stand out as a beacon of change, providing essential financial tools and opportunities for economic participation amidst ongoing geopolitical and economic challenges.
Regulatory framework and the future of crypto in Ukraine
Ukraine has taken significant strides towards aligning its national regulations on crypto assets with the EU directives, notably MICA, TFR, and the new AML package. The Ukrainian Parliament passed the Law on Crypto Assets prior to the war. Despite the turmoil of this war, regulatory bodies persist in developing these provisions to establish clarity and legal certainty within the industry.
The crypto ecosystem is robust in Ukraine. There are a lot of engineers in Ukraine who are building the most significant protocols in defi. While many have temporarily relocated to other countries like Portugal, many of the best defi builders are still in Ukraine. We can leverage the extreme grassroots crypto adoption and immense expertise to put forth more innovative legislation for crypto in Ukraine. Otherwise, we risk losing this unique opportunity to create a new future of finance and public services utilizing blockchain technology.
Ukraine’s ranking in the top five in the global crypto adoption index and its flourishing defi sector are testaments to the country’s resilience and innovation. Projects like Hacken, which stands among the top Ukrainian web3 startups, embody the spirit of Ukrainian tech diplomacy and the potential for a post-war economic resurgence powered by digital technologies.
Hope for freedom
As we mark two years since the start of the full-scale war, it’s a moment to reflect on the resilience and innovation that have emerged amidst these challenging times. I have never seen the decentralized web3 so united by a single shared commitment to stand with Ukraine. I am immensely grateful to the global community for their unwavering support. This journey, while fraught with challenges, is also filled with hope—hope for freedom for the nation and its people.
