It has been two weeks since Russia kicked off the first large-scale military action in Europe in the 21st century — a so-called “special operation” in
It has been two weeks since Russia kicked off the first large-scale military action in Europe in the 21st century — a so-called “special operation” in Ukraine. The military conflict immediately triggered devastating sanctions against the Russian economy from the United States, the European Union and their allies and has put the crypto industry in a position that is both highly vulnerable and demanding.
As the world watches closely, the crypto space must prove its own standing as a mature and financially and politically responsible community, and it must defy the allegations of being a safe haven for war criminals, authoritarian regimes and sanctioned oligarchs. Up to this point, it has been going relatively well. But despite reassurances from industry opinion leaders, some experts say that crypto’s decentralized nature might seriously jeopardize the effort.
The donations precedent
Amid the wave of support for Ukraine from citizens, institutions and governments across the globe, the nation set a crucial precedent. On Feb. 26, the third day of Russia’s military operation, the Ukrainian government announced that it would accept donations via crypto. It made the statement on Twitter and listed Bitcoin (BTC), Ether (ETH) and Tether (USDT) wallet addresses. It came as the official approval of a similar previous announcement from the nation’s 31-year-old, digital-savvy deputy prime minister, Mykhailo Fedorov.
The idea of a distressed European country officially accepting digital assets from those ready to extend a helping hand sounded so shocking that even Vitalik Buterin initially doubted the statement’s authenticity. But Tomicah Tillemann, former senior adviser to two U.S. secretaries of state, confirmed the validity of the wallets, citing a former Ukraine ambassador. Kyiv-based cryptocurrency exchange Kuna Exchange put together and manages the infrastructure for donations.
Blockchain analytics firm Elliptic has estimated that these wallets, and those of another Ukraine-related initiative called “Come Back Home,” have received north of $63 million in crypto as of March 9. The money came from more than 120,000 individual donations.
Donors include Polkadot founder Gavin Wood, who sent $5.8 million; the anonymous sender of a donation worth $1.86 million, which “appears to have come from the proceeds of the sale of NFTs created by Julian Assange and the digital artist Pak”; and Chain.com CEO Deepak Thapliyal, who donated about $290,000. However, the vast majority of the donations have come from ordinary individuals and are less than $100.
A separate initiative called UkraineDAO was launched at the beginning of the war by Nadezhda Tolokonnikova, who is a member of Russian activist group Pussy Riot, alongside Trippy from Trippy Labs and PleasrDAO members. Raising ETH via PartyBid, UkraineDAO gathered donations from prominent tech individuals and entities such as online subscription platform OnlyFans and Reddit co-founder Alexis Ohanian. By March 3, UkraineDAO had raised over $6 million in Ether.
While these numbers are nowhere near the amount of financial support the United States and European Union are expected to send to Ukraine, which could reach around $16 billion, they set a unique precedent of immediate, direct and horizontal support of a humanitarian cause — undoubtedly a tour de force by the global crypto community.
Regulatory anxieties
In addition to the widespread enthusiasm for immediate support of those in dire need, the conflict has reinvigorated the debate around the focal issue of international regulation: crypto’s potential capacity to subvert financial sanctions such as those imposed by the global community upon Russia. On March 2, at a hearing of the U.S. Congress’ House Financial Services Committee, California Representative Juan Vargas asked acting Federal Reserve Chair Jerome Powell if cryptocurrency could be a “way out” for financial transactions as Russia faced the possibility of being cut off from the global SWIFT network. Powell was not too specific in his response but went with the standard crypto-suspicious language:
“There isn’t in place the kind of regulatory framework that needs to be there. […] What’s needed is a framework — in particular, ways to prevent these unbacked cryptocurrencies from serving as a vehicle for terrorist financing, just general criminal behavior, tax avoidance and the like.”
Simultaneously, a group of senators that include some consistent critics of the digital finance industry, such as Elizabeth Warren and Sherrod Brown, sent a letter to Treasury Secretary Janet Yellen expressing their concern. Pointing to the examples of North Korea and Iran, the authors shared their fears that crypto could be used to facilitate cross-border transactions to circumvent the new sanctions.
Strangely enough, among the various tools for such circumvention — such as the dark web and crypto wallets — the text underlined a possible “deployment of…
cointelegraph.com