World

This Is Why Ukraine Becomes A Crypto Donor

Cryptocurrency transfers usually take some time.

Kiev:

Cryptocurrencies have taken on an unprecedented role in the war in Ukraine, helping the government raise millions of dollars to fund its fight against Russian aggression.

Why is Ukraine turning to cryptocurrencies, and how has the emerging cryptocurrency industry changed its reputation and made an impact amid a cloud of war?

How many cryptocurrencies have been raised?
At the beginning of the conflict, Ukrainian officials posted addresses for two crypto wallets on their Twitter accounts, giving donors a direct and clear address to send donations.

The wallet drew in 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 cryptocurrencies have been raised, with the “Crypto Fund for Ukraine” run by Michael Chobanian – founder of the Ukrainian cryptocurrency exchange Kuna – accounting for 60 percent of all donations.

“We are still collecting crypto. It is spent on aid such as daily rations and bulletproof vests and helmets,” the 37 -year -old Ukrainian told AFP.

Initially, two funds were established, one for humanitarian purposes and the other to support the Ukrainian army.

However, after the violence escalated across Ukraine, the funds were consolidated and focused entirely on supporting the military, Chobanian said.

He said that the majority of crypto donations come in the form of Bitcoin, Ethereum and stablecoin Tether – coins that are pegged to each other to the dollar.

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

The U.S. cryptocurrency charity, “The Giving Block”, told AFP that cryptocurrency donations have the potential to attract “young donors” who want to support a variety of causes.

Another reason crypto donations are valuable to Ukrainians 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 additional advantage of donating in cryptocurrencies is the speed of transfer. Bank wires may take up to 24 hours to be verified between the two countries. However, cryptocurrency transfers typically take some time.

What are the disadvantages?
Despite the success of crypto in aiding Ukraine’s war effort, it has not always been a smooth ride.

In the early days of the conflict, the deputies for digital transformation wanted to issue Ukraine’s own crypto as a symbolic signal for the purpose of Kyiv, but the project was eventually canceled.

To make matters worse, the public seized the opportunity to produce and market counterfeit versions of planned government -issued cryptocurrencies.

“There is a lack of communication” in the government, said Chobanian, who now works closely with the ministry.

“It was the first day of the war,” he recalled.

Moreover, cryptocurrencies have become part of the shadow economy of Ukraine – used as a medium of exchange in online crime, tax evasion and capital flight.

According to data analytics firm Chainalysis, transactions from Eastern Europe to other regions are very high, and the company suggests that “capital flights could contribute” to some crypto movements in the region.

What are the consequences?
While there are risks associated with crypto, Chobanian is confident it will become a core part of the Ukrainian economy.

“When we win the war, we will rebuild Ukraine using blockchain technology. We are all helped by crypto,” he said.

While Chobanian’s aspirations may be very ambitious, they are based on real developments.

On Wednesday, President Volodymyr Zelensky passed a law that would provide a legal framework for crypto and consumer platforms to operate domestically.

Caroline Malcolm, head of international public policy and research at Chainalysis, told AFP that the conflict in Ukraine “forces governments to develop their understanding of cryptocurrencies and their regulation”.

He believes that such discussions could benefit the crypto industry, leading to “proportionate and effective regulatory policies”.

As of last week, U.S. President Joe Biden signed an executive order seeking further clarification and guidance on crypto rules – demonstrating Washington’s willingness to compete with an ever -evolving and new asset class.

(This story has not been edited by NDTV staff and is automatically generated from a syndicated feed.)

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