Russia’s invasion of Ukraine uncovered the importance and potential that cryptocurrencies can have in a war. On February 24, when the attacks began on Ukrainian territory, the country’s Central Bank stopped activities in the foreign exchange market, restricted withdrawals in local currency and electronic operations, giving way to donations and, in turn, scams in cryptocurrencies.
Today, cryptocurrencies have positioned themselves as an alternative source of commercial exchange other than currency and come from an innovation in technology, commerce and the economy, says Dr. Gerardo Hernandez Barrena in his research “Tax treatment of cryptocurrencies”.
Since February 26, the Ukrainian government began receiving cryptocurrencies such as bitcoin, ethereum, TRON, Polkador, among others. The decision was the right one, because until March 3, the Elliptic firm registered 105 thousand donations in crypto assets.
Cryptocurrencies as a financial asset and its decentralized marketing have caused great fury.
According to Kim Grauer, Director of Research, Chainalysis exclusively with Merca 2.0, criminals and fraudsters “use cryptocurrencies for the same reasons people use them. used for legitimate purposes: they are cross-border, instant and low cost”.
The benefits of cryptocurrencies to support a war cause: Russia-Ukraine conflict
Since cryptocurrencies represented a new type of financial asset and that due to their characteristics were marketed in a decentralized manner, they have caused great fury at the government level as well as in the general public.
In context, its attributes are being exploited because “it is particularly well-suited for international fundraising because it does not respect national borders and is resistant to censorship: there is no central authority that can block transactions,” said Tom Robinson, senior scientist at Elliptic. .
One of the most attractive features of cryptocurrencies is that they are not regulated by any institution and do not require any intermediary to carry out transactions, but instead work under the technology of the blockchainwhich merges as a shared accounting record.
In addition, in the conflict, society is losing trust in the banking system and the Central Bank of Ukraine is cracking down on digital money transfers: leaving the door open for the population to turn to cryptocurrencies.
Donations in cryptocurrencies, does the army receive electronic coins?
Originally, NGOs received funds through bank transparencies or payment apps, but with the conflict financial institutions may block payments to Ukraine. In this way, cryptocurrencies are positioned as an option, since borders do not matter.
Ukrainian activists are deploying the cryptocurrency donations to equip the Ukrainian military with military equipment, medical supplies, and drones, as well as fund technology to identify if someone is a mercenary or a spy for the invaders.
However, the Ukrainian Ministry of Defense clarified that it will not accept digital currencies:
“The national legislation does not allow the Ukrainian Ministry of Defense to use other payment systems”, preferring only cash and leaving aside Bitcoin and Paypal.
This means that the armed forces of the invaded country only accept donations for logistics and medical support.
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