The Russian-Ukraine War and Cryptocurrency.
The prices of major cryptocurrencies are falling as the conflict between Russian and Ukraine escalates. On Tuesday, Bitcoin fell to $36,370 after hitting $44,125 a week ago, while other popular cryptocurrencies, including Ethereum and Solana, also dropped recently.
Analysts say the drop suggests cryptocurrency is a terrible choice for investors looking for stability in times of market turmoil compared to traditional hedging measures. Like gold and US Treasuries. Yuya Hasegawa, Bit Bank’s crypto market analyst in Japan, says the safe-haven story of
The Bitcoin relationship is almost completely falling apart as the possibility of military conflict grows and the relationship A deterioration in the US-Russia trade puts the broader financial market in a risk-averse state, Yuya Hasegawa, a crypto market analyst at Bit Bank in Japan, said in a research note. In a recent report, Edward Moya, senior market analyst at Oanda, said
Bitcoin is the highest risk asset, and an invasion of Ukraine would increase the selling pressure of crypto by 10- 15% shortly.
Russia and Ukraine make different decisions about the role of cryptocurrencies in the economy alongside the war.
Ukraine Accepts Bitcoin Donations.
Ukraine’s Defense Ministry said it welcomes logistical and medical support donations but clarified that it could only accept fiat transfers to its bank accounts. There is $400,000 in crypto donations collected by an IT expert from Kyiv to support the Ukrainian army. Western crypto activists call for a campaign on behalf of the Ukrainian people.
But it remains to be seen to what extent this might affect the war. Donations of a few hundred thousand dollars in bitcoin, while symbolic, may not mean much for a Ukrainian military that received $650 million in weapons from the United States last year and is still significant.
Both sides have deep cryptographic roots. Chainalysis ranks Ukraine as the top crypto-acceptor in Europe and fourth globally. In September, the country legalized crypto after years of obscurity, and its new digital converter released video ads recruiting tech startups that may include cryptocurrency. Death.
A group of Western crypto activists has called for donations in support of Ukraine shortly after Russia launched its attack on Thursday. Ryan Selkis, the founder of crypto company Messari, tweeted: “One of the best things we can do as an industry is figuring out how to support the Ukrainian people and their resistance with cryptocurrency contributions.”
Late Thursday, Sam Bankman-Fried, CEO of crypto platform FTX, said on Twitter that we just gave away $25 to every Ukrainian on FTX. He did not immediately respond to a request for clarification. In Ukraine, Vitaliy Deynega, a computer scientist in Kyiv who founded an NGO called Come Back Alive, has raised $400,000 in crypto since the war started to buy medical supplies and military equipment for the army to Elliptic. Crowdfunding for global purposes is not new, but cryptocurrencies make it easier to transfer money without the same barriers as traditional bank transfers.
Changes to Russian Policy
Meanwhile, Russia’s confused crypto policy also contributed to the crisis. 21. The country’s finance ministry said it would review its central bank’s cryptocurrency proposals as long as they don’t conflict with its approach, paving the way for legislation. Management of cryptocurrencies and digital assets.
A heated dispute over cryptocurrency regulation in Russia heated up on February 18 when the Ministry of Finance submitted legislative proposals to the government that conflicted with the central bank’s request for a ban. An overview The Central Bank of Russia has proposed a ban on cryptocurrency trading and mining due to the threat posed by digital currencies to financial stability. But the Treasury Department prefers legislation regulating cryptocurrencies, allowing them as an investment instrument but not a means of payment. The Treasury Bill aims to create a legal market for digital currencies.
A proposal regarding transactions involving the purchase or sale of cryptocurrencies requires customer identification, a decision that could reduce one of the main selling points of cryptocurrencies—the anonymity of their owners.
Other proposals include allowing foreign cryptocurrency exchanges to be licensed in Russia and introducing financial literacy tests to determine how many individuals can invest. The finance ministry said that citizens who pass the tests would be allowed to invest up to 600,000 rubles ($7,853) in digital currencies each year. Those who fail will have an investment limit set at 50,000 rubles per year.
The central bank also opposes cryptocurrency mining, whereby powerful computers compete against others hooked up to a global network to solve complex mathematical puzzles. The bank has warned of inefficient energy consumption and the environmental impact of mining, while the finance ministry prefers to permit mining on a taxation basis.
Russia Tends to Avoid Sanctions
Russia’s crypto activity has historically fallen short of the transactions handled by the country’s traditional financial institutions. For example, according to a recent study by blockchain data firm Chainalysis, Russian sources collected around $400 million in cryptocurrency from ransomware attacks last year, or 74% of the proceeds from crimes. Global crime. However, these amounts represent only a tiny fraction of the $46 billion in foreign exchange transactions that the US Treasury Department says are handled daily by Russian financial institutions.
The challenge for the Russian economy and individuals, in this context, is that the immaturity of cryptocurrencies in their financial system does not allow them to bypass the international sanctions imposed on them. On a large scale, said Juan Zarate, former Assistant Secretary of the Treasury and Deputy National Security Adviser in the George W. Bush administration. If that happens five years from now, and there is more infrastructure, adoption, and volume, that could be a different story. But this is not the current reality.
Russia’s crypto activity has historically fallen short of the transactions handled by its traditional financial institutions. For example, according to a recent study by blockchain data firm Chainalysis. Russian sources collected around $400 million in cryptocurrency from ransomware attacks last year, or 74% of the proceeds from crimes. Global crime. However, these amounts represent only a tiny fraction of the $46 billion in foreign exchange transactions. That the US Treasury Department says are handled daily by Russian financial institutions.
The challenge facing the Russian economy and individuals. In this context, is that the immaturity of cryptocurrencies in their financial system does not allow them to circumvent the international sanctions imposed on the world. Juan Zarate, former Assistant Secretary of the Treasury and Deputy National Security Adviser in the George W. Bush administration. If that happens after five years and there’s more infrastructure, adoption, and volume, it could be a different story. But this is not the current reality.
Cryptocurrency and Regular Money.
This was the first war waged in the cryptocurrency (digital money) era. Digital asset trading is booming, but it still carries a lot of hope and a lot of excitement. There is a romance in the concept of sending bitcoins to the frontline. But the reality is that soldiers and oligarchs always need money.
That’s because options for turning crypto into regular money and vice versa remain limited. That’s a problem both for those trying to offer Ukraine relief and those seeking to evade sanctions. For example, Bitcoin can’t readily pay for food or medical supplies in a conflict zone. Instead, you need a service to convert your money into one licensed as a money transmitter. Which means anti-money laundering regulations kick in. Some companies provide APIs for converting cryptos. Such as Monday, Transak, and Wyre, but oversight of this part of the industry is just emerging. And the rules are often unclear.
Monday and Wyre do not work in Russia. The typical crypto holder does not keep a hardware wallet locked in a vault. Most likely use a centralized exchange like Coinbase, which has already attracted millions of visitors with Super Bowl ads. Last year, the company admitted disclosing transactions to the Treasury Department’s Office of Foreign Assets Control, enforcing sanctions.
These are purely the opinions of the author based on observations. An analysis of financial platforms and a study of public reviews. And ratings on how the cryptocurrency seems to be at war alongside the Russian-Ukraine war. Excerpts from various sources have been used to clarify the facts in this article. A glossary of all the sources used can be found at the end of the article. This article is for educational purposes only and is not financial advice.