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The Russian-Ukraine war impact on crypto

By , Content Writer, Yellow Card Financial
Africa , South Africa , 20 May 2022
Favour Jolaoso.
Favour Jolaoso.

The first cryptocurrency, bitcoin was created over a decade ago, and since then, cryptocurrencies have begun to revolutionise the world. Digital currencies have proven themselves a prime investment choice and effective payment method, promising financial freedom. However, they haven’t received the warmest embrace from central banks and governing authorities, who have primarily been sceptical and threatened by cryptocurrencies.

While certain countries like El Salvador have taken the bold step of recognising its potential and chose to accept it as legal tender, others have straight out banned it, like Morocco and China. Some have even implemented some regulatory practices to make it challenging to trade cryptocurrencies. The Central Bank of Russia had once proposed a complete ban on cryptocurrency and recommended stiff penalties for persons who defaulted. However, this was overhauled with the government deciding to recognise cryptocurrencies, thus creating a regulatory framework.

In truth, there are no questions about the importance of cryptocurrencies in the financial economy however concerns of governing authorities have often centred on the impact it may have on the traditional financial system. Well, several of these doubts in the last few weeks have been cleared following the power tussle between Ukraine and Russia.

The Russian-Ukraine war

In February, the world was shaken by the possibility of world war III. The last two wars were simply devastating. Thus, making it even more terrifying considering the innovations and technologies that have come into existence since then that could ultimately result in a nuclear war and maybe even Armageddon. Social media was abuzz with several memes, posts, and tweets as the world tried to make sense of the possible world war. Ukraine and Russia had for long had a strained relationship but it was ultimately devastating when President Putin of Russia unwarrantedly launched an attack on Ukraine. It resulted in the death of several officials, and civilians and the destruction of properties worth millions.

The news of the attack resulted in a spiral even in the crypto space, as several weak hands began a massive sell-off for fears of what the news of the war might do to the volatile market conditions. This resulted in a major price decline of major cryptocurrencies like BTC, ETH among several others. As expected, after the attack on Ukraine several countries were riled up and rose to Ukraine’s defence with the United Nations proposing sanctions to stifle Russia.

What was crypto’s role in this?

At the start, the governing authorities considered cryptocurrencies a stumbling block in their attempt to sanction Russia. This is because there were several speculations that with cryptocurrencies Russia would evade their sanctions. In fact, Ukraine Vice Prime Minister, Mykhailo Fedorov took to his Twitter account and pleaded that Notable exchanges should cut all ties with Russia. In fact, US Security and Exchange Commission placed a mandate on crypto exchanges to ban Russian users from using their crypto-wallets.

Yet, the call to ban Russian users although might be understandable from an emotional outburst proved unfair to Russian citizens. Notable crypto exchanges like Binance strongly stood against the proposition to ban innocent Russian users who were using crypto for their everyday transactions. Rather, crypto Russian users who were found to have violated or were charged with violations were the only ones banned. Cryptocurrencies due to their decentralised nature and the fact that it was free from central authorities ensured that Russian users were not unnecessarily excluded from financial inclusion.

After the initial fear of crypto being used to evade sanctions by Russia, Ukraine which before then had been on the fence about Cryptocurrencies took the initiative to recognise and legalise cryptocurrencies as digital assets. This is considered a great win for the crypto space for another country joined the crypto revolution. Following this, Ukraine launched a website where people from across the globe could send funds in local currencies and cryptocurrencies. Since its creation, there has been almost $150 million in crypto donations.

Also, Ukraine set up a MetaHistory NFT museum, the first of its kind, that features the war between Russia and Ukraine in NFTs. Profits made from the donations and NFT sales will be used to support Ukraine with aid and amenities for its citizens, and it will be used to repair damaged structures from the war. In fact, following these developments, the market sentiment improved with recorded price increases in cryptocurrencies, and more countries moving towards crypto adoption.

For those who had fears about how the Russian-Ukraine war will affect the crypto market, well crypto has had a large impact on the war. Rather than crumble as feared, it has become a tool to support the injured in the war and fight for human rights. Cryptocurrencies have been used to facilitate cross-border donations to Ukraine and have emphasised that no one should be excluded from financial freedom.

As crypto adoption thrives in Ukraine, several countries across the globe, most notably African countries such as Tanzania and South Africa, have begun in-depth research into harnessing the benefits of cryptocurrencies. While the central authorities debate on the best strategy for crypto regulations, persons from across the globe can easily join the crypto revolution by joining trusted crypto exchanges to harness the many benefits of cryptocurrencies.

Crypto adoption is still ongoing, and there is still a long journey ahead as nations strive to better understand cryptocurrencies in an attempt to harness their benefit. 

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