Cryptocurrency provides anonymous, deregulated ways of sending and receiving money. However, prior to the war in Ukraine, defenders and critics of crypto may not have conceived of how significant a role it would play in financing armed conflicts.
With nearly all forms of commerce and banking in Russia subject to strict sanctions from across the globe, the country, as well as its people, are turning to cryptocurrency to continue being able to spend and use money. According to CNN, the sanctions on Russia have prevented the country from using its assets stored in US dollars, which it had been relying on for the invasion of Ukraine.
This is where cryptocurrency comes into play. Because these digital currencies are not regulated and controlled in the same way as the rest of standardized banking throughout the world, it is a bit of a financial wild west where anything goes.
According to Reuters, some critics are worried that crypto exchanges may offer a backdoor for Russian officials to subvert the sanctions placed upon them. While the largest exchanges say they will screen users and block those targeted by sanctions, skeptics are worried about the unregulated currencies may find their way to Russian officials and oligarchs anyway.
On the other side of the argument, crypto advocates say that the crypto market is simply too small to meet the large-scale financing needs of the Russian government, according to The Washington Post.
While officials around the world are concerned about how cryptocurrencies may assist Russia in subverting their sanctions, there is also a large show of support for Ukraine in the crypto world. At the beginning of March, the Ukrainian government had received over 100,000 crypto-asset donations which totaled nearly $55 million in aid to the country, according to CNBC.
Crypto exchanges happen immediately, allowing the Ukraine government and people to bypass standard transfer periods associated with traditional financial exchanges. The Ukraine government took to twitter to ask for donations to their crypto wallet, resulting in a massive influx in aid from people around the world.
While cryptocurrencies are certainly untamed, the lack of regulation and oversight has provided relief for the Ukrainians even if it means that Russians are able to access those benefits as well.