The Russian invasion of Ukraine brought with it a torrent of unexpected dynamics. Representing the first large-scale war in Europe since World War II, the invasion sent shockwaves through the global economy – while forging a new sense of unity in the West. Unlike previous conflicts, the interconnected nature of global communications brought an unprecedented level of information directly from the frontlines. While still tinged with propaganda, the real-time view presented changes everything we thought we knew about war.
Cryptocurrency represents another technology that emerged in the time between major conflicts. As traditional financial institutions abandon the Russian Federation, the Russian people are increasingly turning to cryptocurrency as a means to preserve wealth. While this will not save them from crippling international sanctions, it shows that cryptocurrency is, increasingly, a fact of life – in peace and war. While Russia desperately tries to stave off complete economic collapse, Ukraine finds itself flooded with foreign support – including a significant sum of cryptocurrency.
Effectively forced to fight Russia alone, Ukrainians proved more than capable of repelling the incursion. The Russian army struggled to make any headway over the past week. NATO countries stepped up their clandestine support, including an ever-increasing number of direct lethal weapon shipments.
Beyond this, citizens of countries around the globe donated millions in fiat and cryptocurrency to support the Ukrainian defense. Proving the simplicity and efficiency of cryptocurrency systems, this funding bypassed traditional institutions and wait times. In less than six days since Ukraine began accepting cryptocurrency donations, the country has pulled in $48 million worth, as of March 3, 2022. Although it appears that the Ukrainian government is struggling to leverage its newfound crypto wealth, Russia does not suffer from the same problem.
Russia may be buckling beneath the combined weight of global sanctions, but they are not able to receive donations. Rather, Russian citizens – including the infamous oligarch-class – instead seek to avoid the collapsing economy by fleeing into cryptocurrency. As a consequence, the overall cryptocurrency market saw an unexpected boost, prompting a new wave of questions regarding crypto-policy in first-world nations.
As the conflict plays out, we will see the full scope of cryptocurrency involvement. As the need for cryptocurrency becomes more solid, and Ukraine determines the best use for their new fortune, the industry could see increased legitimacy. Unfortunately, depending on the actions and reactions involving Russian sanctions, we could also see detrimental legislation emerge in key nations.