How Ukraine assumed cryptocurrencies in response to war

It was a plan that was hurriedly discovered on the second day of the invasion. The Ukrainian Minister of Digital Transformation, Mykhailo Fedorov, turned to his deputy and instructed him to set up official government money exchanges that could accept payments in cryptocurrency.

When there were snakes in front of ATMs and supermarkets in Kiev, Alex Bornyakov knew that he had to act quickly.

"Our banks were limited, there were restrictions on the use of Fiat currencies and the supplies quickly went out," he said. "Even if you manage to pay with Fiat, a transfer takes a few days for it to reach the recipient. It takes minutes in the crypto world."

Ukraine had already started to accept crypto before her war. The country was classified in fourth place in a global index of Chainalysis, the crypto research group, for the introduction of cryptocurrencies among its citizens.

But the conflict has worked as a catalyst for the government's ambitions to build an innovative, blockchain-friendly economy, led by a young team of techno native in the government: Fedorov is 31, Bornyakov, 40, and President Volodymyr Zelensky, 44.

The government has collected more than $ 100 million in donations in cryptocurrency since the start of the war. Although this is low compared to the billions in the help of Western governments and the IMF, Bornyakov said that Krypto has become a major war tool that enables flexibility and speed.

"It is a great achievement by the government that we have young managers, we are more enthusiastic and ready to accept changes," said Bornyakov, an attitude of which he believes that it has contributed significantly to the implementation of this cryptopolitics.

The country's pro-crypto initiative continued this week, whereby the government introduced legal structures to boost the industry.

crypto exchanges may now be operated in the country, consumers are protected from fraud, and the National Bank of Ukraine and the national security and stock exchange commission have been appointed supervisory authorities. According to the backers of the new legislation, the National Bank could finally introduce its own digital currency.

The Ukrainian government has already issued half of its crypto donations for thousands of bulletproof vests, food rations, helmets and medical relief goods-and deliberately decided to issue the funds for non-fatal equipment so as not to deter future donors.

Part of the means was also issued for what Bornjakow calls a "war of digital diplomacy", which attempts are made to reach the Russians on site that "live in a bubble that is fed with propaganda", by media campaigns in social networks.

In the meantime, the government quickly made new agreements with military suppliers to accept payments in cryptocurrencies for the first time.

Michael Chobanian, founder of the KRYPTOGOUSTHEST Kuna and President of the Blockchain Association of Ukraine, worked with the government to scale their crypto efforts next to the FTX stock exchange and the Ukrainian staking platform Everstake.

"We are the parallel banking system for the country," said Chobanian. "We don't care who supports us-hackers, crypto criminals-as long as they send us money," he added.

lasts during the war, the government has refined its approach. This week she started an official AID for Ukraine website that accepts donations in nine cryptocurrencies, including Bitcoin, Ether, Tether, Solana and Dogecoin. Before that, it only applied its official crypto wallet addresses on Twitter.

but also social media and messaging platforms such as Telegram are populated by an influx of cryptocurrency frauds that pretend to collect donations for Ukraine.

"We have seen an increase in accounts since the invasion that deal with Ukraine," said Brittany Allen, trust and security architect at the fraud-proof company Sift. Telegram did not respond to a request for comment.

Lisa Cameron, a British MP and chair of the British all-party parliamentary group for crypto and digital assets, said the war showed "how crypto can be a strength for good in this terrible moment of history".

"But there are still real concerns how un -regulated the industry is and how Russians could use to avoid sanctions," she added.

global crypto exchanges, including Binance and FTX, were criticized because they refused to completely cut off Russian users. The companies argue that a flat -rate ban would be aimed at normal citizens and have undertaken to energetically enforce sanctions.

on the way there there were also some failure when the Ukrainian government worked out the best opportunities for using digital assets in such an unusual situation.

At the beginning of this month, the government announced that they would thank the those who donated to their crypto wallets with an "Airdrop": If NFTS or other tokens are assigned to investors in a project, often to promote more registrations. Hours later, Fedorov canceled these plans "after careful consideration" - a sign of how frenetically the digital strategy can be.

In social media, the crypto community joked that this is "the best carpet of all time", a term that is used to describe when someone canceled a hypede NFT project after investors have registered, pulled away the carpet under their feet and run away with the money.

The next step of the Ukrainian government will lead to it becoming the first industrial country that publishes its own collection of NFTs - collectible tokens that are fixed in the blockchain and therefore cannot be replicated.

It is planned to bring a number of NFTs on the market under the working title of meta history: War Museum . The collection will contain a token from every day of the conflict, with works of art that comply with a news report.

Bornyakov said the tokens would provide an unchangeable recording in the blockchain to document and reflect on the conflict and at the same time collect money to support the country's struggle.

"This is the first time that the power of crypto is used in this way," said Sergey Vasylchuk, founder of Everstake, who fled his homeland and his headquarters in Kiev. "Mass adoption is now inevitable."