Wednesday, 25 May, 2022
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Cryptocurrencies take on unprecedented role in Ukraine war

Cryptocurrencies take on unprecedented role in Ukraine war

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LONDON: Cryptocurrencies have taken on an unprecedented role in the war in Ukraine, helping the government raise millions of dollars to fund its fight against the Russian invasion.  Why has Ukraine turned to cryptocurrencies, and how is the nascent crypto industry changing its reputation and having an impact amid the clouds of war?

At the outset of the conflict, Ukrainian officials posted addresses for two crypto wallets on their Twitter account, giving donors a direct and clear address to which to send contributions, reports AFP.

The wallets attracted more than $10.2 million (9.2 million euros) just four days after the start of the invasion.

Since then, more than $100 million worth of crypto has been raised, with the “Crypto Fund for Ukraine” run by Michael Chobanian—the founder of the Ukrainian crypto exchange Kuna—accounting for 60 percent of all donations.  “We are still collecting crypto. It is being spent on aid like daily rations and bullet-proof vests and helmets,” the 37-year-old Ukrainian told AFP.

Initially, two funds were set up, one for humanitarian purposes and the other to support the Ukrainian military.

However, after the violence escalated across Ukraine, the funds were merged and focused fully on supporting the military, said Chobanian.  He said that the majority of crypto donations came in the form of Bitcoin, Ethereum and the stablecoin Tether—a coin pegged one-to-one to the dollar.

What are the benefits of donating in crypto? - Aid packages sent to Ukraine in fiat money from the United States and the European Union dwarf cryptocurrency donations, but the latter allow individuals to get involved.

US crypto charity, “The Giving Block”, told AFP that cryptocurrency donations have the potential to attract “younger donors” who are looking to support various causes.

Another reason crypto donations are of value to Ukraine is because they are less influenced by geopolitical or macroeconomic factors. Chobanian points to the depreciation in the value of the Ukrainian hryvnia as a result of inflation.

An extra advantage of donating in cryptocurrencies is the speed of the transfers. Bank wires may take up to 24 hours to be validated between two countries. However, cryptocurrency transfers typically take less time.

Despite the success of crypto in aiding the Ukrainian war effort, it has not always been a smooth ride.