The war in Ukraine could accelerate the growth of the crypto sector

The Ukrainian government announced on social media last month that there would be global donations in Bitcoin, Ethereum and Tether to support his army.

It may have looked like a advertising work. Not like that. According to Brittany Kaiser, a crypto entrepreneur (and former whistleblower at Cambridge Analytica), around $ 106 million in crypto donations have been incorporated if you add up all initiatives on various platforms. It is part of a tech network that helps Mikhail Fedorow, The Ukrainian Minister of Digital Transformation to organize this.

to the context: This pot exceeds the initial 90 million euros in humanitarian aid for Ukraine (although Brussels now increases it) and will almost certainly grow because Fedorov's network is struggling to tap into every crypto tribe.

gavin Wood, for example, the co -founder of Ethereum, tweeted that he would "personally contribute $ 5 million" if Polkadot, the token he created, were accepted next to the others. Coder reacted and the central bank now accepts numerous assets, including non -fungi tokens. "The innovation is amazing," says Kaiser. "We haven't seen anything like it yet."

What should the wider financial world think of it? Many traditionalists like mockery. Some supervisory authorities could also flinch because American and European supervisory authorities are struggling to prevent Russian companies and citizens from using crypto to avoid western sanctions. But it would be foolish for every investor-or political decision-makers-to ignore this $ 106 million pot. On the one hand, it shows that today we live in a world that is shaped by networks, not just from hierarchical institutions.

It is also a symbol for a larger point: the war in Ukraine could be a fire accelerator for the cryptos sector. "Russia's invasion in Ukraine is the first big event in which cryptocurrencies are part of the equation," the hedge fund bridge -baked told customers this week. "In addition to structural changes, this short -term dynamic occurs on the cryptocurrency markets, of which we believe that they increase themselves, since acceptance increases by important institutional investors and the surrounding ecosystem is deepened."

or like Michelle Ritter, managing director of the technology company Steel Perlot from Silicon Valley, noted: “The key moment of social media came in 2011, as videos, tweets and other contributions from Libya, Egypt, Yemen, Syria and Bahrain. Cryptocurrency]. “

There are two factors that contribute to such predictions. Einer davon ist, dass die Invasion an einem Ort stattgefunden hat, der in den letzten Jahren eine Brutstätte für Kryptoaktivitäten und technische Talente war. The Chainalysis research group, for example, calculates that Ukraine in 2020 had the world's highest cryptone use per capita and in 2021 the fourth highest.

This has laid the foundation for a technically versed network that is ready for innovations. This does not mean that cryptocurrencies were particularly useful as a means of payment in the war, since conventional channels have dried out, except for donations. While some western technology companies tried to pay their employees in Ukraine in Krypto, tell me that they had to struggle with it.

crypto was also not a particularly good short -term value -plent of value; In the past few weeks, the price development of Bitcoin has developed significantly worse than gold, traditional wealth memory from times of war, says Bridgewater. But, it adds, the "rising Russian and Ukrainian currents in crypto during this war show how cryptocurrencies are seen and used as alternatives to fiat currencies"; Innovation should accelerate.

The second factor is that western sanctions against the Russian central bank have aroused fears that non-Western countries will avoid the dollar in the future. It is unlikely that this will overthrow the status of the Greenback as a main reserve currency in the short to medium- or at least not in a world in which the European Central Bank works closely with the USA and the Chinese currency is not yet free and the entire cryptocurrency world is only $ 2 trillion.

The intensification of the debate, however, increases the pressure on the US government, to react, especially in view of the fact that China recently introduced its own digital currency. Therefore, President Joe Biden took a break from the frenetic diplomacy of the White House on Ukraine - and the efforts to contain the oil price spiral - to announce the start of the first American federal initiative for digital assets. The details are vague, but include the support for the starting efforts of the US Federal Reserve to develop a digital dollar.

It is highly unlikely that a digital dollar will soon become a reality or that the Securities and Exchange Commission will suddenly accept stable coins or Bitcoin funds. But the crucial point that investors have to understand is that Washington increasingly wants that innovations in this area take place within its regulatory tent, not outside - or offshore.

While this may be horrified, the larger actors in the crypto industry seem to be striving to get in touch with the establishment - and try to polish up their image in order to leave a good impression. In this sense, the explosion of crypto philanthropy for Ukraine is symbolic in every respect. Consider it as another example of how war can have unexpected side effects, not only in geopolitics, but also in the financial world.

gillian.tet@ft.com

Register for the Moral Money newsletter from Gillian Tett, ft.com/newsletters