“Ukraine buys military equipment with crypto”, claims the minister
Ukraine has purchased military equipment using cryptocurrencies, with the nation’s deputy digital minister claiming that 60% of suppliers were able to accept crypto in return for essential combat items such as “helmets and bulletproof vests.”
One year ago, Russian President Vladimir Putin began the invasion of Ukraine.
Two days after the war broke out on February 24, 2022, the Ukrainian government Twitter accounts posted requests for cryptocurrency donations in bitcoin (BTC-USD), ethereum (ETH-USD) and USDT (USDT-USD) stablecoin.
Since blockchains are transparent public distributed ledgers, it can be seen that more than 100,000 people have sent crypto to Ukraine. The country claims that some of these donations came from Russians, who have sent “significant amounts”.
On this week’s episode of Yahoo Finance UK’s The Crypto Mile, Ukrainian Deputy Digital Minister Alex Bornyakov described cryptocurrency donations to Ukraine as ranging “from one dollar worth, to millions of dollars”.
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He said Ukraine turned to crypto at the start of the invasion because the nation needed help immediately.
“If we used the traditional financial system, it would take days,” he said.
“We were able to secure the purchase of important goods in no time via crypto and what’s amazing is that around 60% of suppliers were able to accept crypto, I didn’t expect this.”
Although his interview with The Crypto Mile via satellite internet link from his office in Ukraine was limited by intermittent power outages, he was able to add: “Companies that produce items such as bulletproof vests, helmets and different types of optics, even they were able to receive crypto”.
Alona Shevchenko, co-founder Ukraine DAOtold Yahoo Finance UK: “At the start of the full-scale invasion a year ago, Ukraine was in an extremely tough situation and the first few days were absolutely critical for our defence.
“The Central Bank imposed restrictions on transfers of foreign currency into and out of Ukraine to stop the run of the hryvnia.
“Thanks to crypto, we were able to meet some of the defenders’ immediate needs, there was literally no other way at the time.”
A third of the donated amount has come through Crypto fund support for Ukraine initiative, which is powered by Ukraine-based crypto platform Kuna and blockchain company Everstake, and supported by the Ministry of Digital Transformation of Ukraine.
Bornyakov said that Crypto Fund Aid For Ukraine was “an absolute success, not only from the point of view of how much money has been collected, but also from the procedure, efficiency and speed of access to funds through crypto”.
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In addition to bitcoin, ethereum and USDT, Ukraine has received donations in cardano (ADA-USD), solana (SOL-USD), polkadot (DOT-USD) and USDC stablecoin (USDC-USD).
In August, Ukraine’s Deputy Prime Minister Mykhailo Fedorov said the country had purchased military equipment including medical kits, scopes, optical sights and thermal cameras.SDC stablecoin, Bornyakov said.
In August, Ukraine’s Deputy Prime Minister Mykhailo Fedorov said the country had purchased military equipment including medical kits, scopes, optical sights and thermal cameras.
Crypto donations to Ukraine “faster and more efficient than traditional financial services”
Mark Lurie, CEO and co-founder of Shipyard Software, said: “In a first-world, peacetime context, the benefits of crypto are marginal. While they are faster, more transparent and more efficient, most of the time they are less practical.
“The Russian-Ukrainian war has put the failures of the traditional financial system into perspective.
“Ukrainians need money to pay for everything from food to drones, but receiving and sending this money has proven extremely difficult in wartime.
“The standard two-day settlement for international wires can already feel like a lifetime when food is scarce and bullets are flying, but in practice, wires in and out of Ukraine are often delayed or even blocked by US and international banks struggling to monitor the source and destination of funds to prevent money laundering, including by the enemy.”
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Because cryptocurrency payments are decentralized, money transfers don’t require going through intermediaries like banks or payment processors, Lurie said. As a result, transactions can be completed immediately and without delays caused by third-party authorization.
Has this set a precedent for the use of cryptocurrencies in crises?
Lurie believes that the war in Ukraine has created a precedent for the use of cryptocurrency in humanitarian efforts during war and after natural disasters.
He said: “It shows the potential for cryptocurrency to be a viable, more robust alternative to traditional financial systems.
“Perhaps the biggest impact of the Ukraine war on crypto is a new narrative. Before crypto was seen as a method to evade law enforcement. Now it is recognized as a tool to empower freedom fighters.
“More and more people are willing to work with crypto to help Ukraine, and as they do so, they realize first-hand that crypto is not only legitimate, but in many ways better.
“What’s really interesting to me is how crypto didn’t become a giant money laundering tool for the Russian side of the war, as many had postulated.”
Russians use crypto channels to anonymously send donations to Ukraine
Russians are sending “significant amounts of money” through cryptocurrency to help Ukraine, according to Bornyakov.
“Crypto in certain cases offers an anonymous way to transfer money,” he said.
“The Russian people who have donated have sent significant amounts.
“I understand that from Russia there is no other way for them to do this than through crypto.”
Many charities and NGOs accept crypto donations for Ukrainian humanitarian relief with bitcoin and ethereum wallet addresses posted on their websites.
Read more: FTX implosion causes $5 billion to be withdrawn from exchanges
However, crypto still has significant problems of its own with critics pointing out that despite claims to be decentralized, it is heavily concentrated in the hands of a few large crypto exchanges, often with opaque transaction rules and inherently speculative with millions of people losing money when crypto firms go loose with FTX, the most spectacular of recent collapses.
See: Women of Web3: Funding Tips and How Not to Undersell Your Startup | Crypto Mile
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