Ukraine had legalized cryptocurrency just days before Russia’s invasion
As the world looks to Ukraine with weary eyes, a growing debate has arisen in distant capitals about the economic fallout from the Russian invasion. Some say this conflict will significantly harm the economies of both countries, others are optimistic. But how and especially why? Just days before the outbreak of the war, Ukraine legalized cryptocurrency. The Verkhovna Rada – the Ukrainian parliament – passed the crypto law, with 272 of its 450 members voting in favor of the legislation. This created a legal cryptocurrency market in Ukraine.
At the time, Mykhailo Fedorov, Ukraine’s deputy prime minister and minister of digital transformation, said the new law represents an “additional opportunity” for business development in the country. He added that Ukrainians now have easy and secure access to the global virtual asset market.
Although the Ukrainian government did not say whether the move was linked to a threat of military conflict, tensions had been high at the Russia-Ukraine border for months. The bill was nevertheless passed on February 17, just a week before the invasion began.
After the Russian attacks, the official Twitter handle of the Ukrainian government sought donations from everyone, including from outside the country. The pinned tweet says: “Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT.” The tweet was accompanied by addresses of two crypto wallets – one only accepted Bitcoin and the other received Ether and Tether, a token that tracks the US dollar.
The Ukrainian government has shown great enthusiasm for crowdfunding its response to the Russian military action. According to blockchain analytics firm Elliptic, the Ukrainian government — and NGOs supporting the military — has raised more than $24 million in cryptocurrency donations to date.
Cryptoassets have emerged as an important alternative crowdfunding method as they allow quick access to the recipient by removing intermediaries from the transaction process. By bypassing intermediaries such as banks, the recipient can minimize the threat of donations being held up or blocked by financial institutions.
