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Crypto and blockchain are being used in unprecedented ways in the Russia-Ukraine war

The war in Ukraine is the first major conflict of the crypto era, and, as it happens, Ukraine itself is a cryptocurrency capital.

Key points:

  • Ukraine has the highest uptake of crypto in Europe
  • Government IT staff are being drafted as hackers and millions in crypto donations from around the world are paying for military equipment
  • New kinds of blockchain-based organisations are coordinating aid in a way that hasn’t been seen before

What was a tool of economic growth in peacetime has now, with war, become another weapon in the fight.

Millions donated to the Ukrainian war effort through anonymous bitcoin donations have been spent on thermal imagers, drones and other military equipment needed for the Ukrainian army.

Charity and relief efforts are being contributed through decentralised autonomous organisations (known as DAOs — more on them later) that also link volunteers around the world with the people in need.

The government department that had been in charge of attracting crypto industries is now tasked with keeping the country online, warning citizens of air raids and missiles, fighting Russian disinformation, coordinating with Google and Facebook, and leading an army of hackers targeting websites and other services within Russia itself.

Meanwhile, crypto has become another front in the war, with Ukraine concerned Russia may use decentralised digital money to get around the recently imposed financial sanctions.

For some, crypto and blockchain are finally showing what they can do — how they can be used for good rather than for NFTs of cartoon apes.

So what effect is crypto having on the war?

From webmaster to wartime hacker

The story of LDV, who wishes to remain anonymous, is an example of the way Ukraine’s tech industry, centred around crypto, has pivoted to war.

A webmaster for an investment fund based on crypto-mining, LDV woke to the news of the invasion on February 24 and tried to flee to Poland from his home in Lviv, in western Ukraine.

“We wanted to withdraw money but the queues were extremely long. If I had waited, I couldn’t cross the border eventually,” he said.

He tried to buy a bus ticket over the border but the transaction was declined, either due to cyber attacks taking the bank offline, or because the Ukranian bank was blocking international transactions.

Finally, he said, he found a friend who was willing to exchange bitcoin for Polish cash, which he used to buy the bus ticket.

Now in Poland, he’s working as a hacker in the war effort.

“I’m preventing Russian propaganda with an electronic cyberwarfare team I joined recently — kind of [like the] Anonymous hacking team,” he said.

How much has been raised through crypto donations?

Ukraine’s “IT Army” is being coordinated by Alex Bornyakov, the Ukrainian deputy minister for digital transformation, who just two weeks ago was addressing a conference in Denver, US, about the country’s long-term goal of becoming “the largest crypto-friendly country in the world.”

Ukraine officially legitimised bitcoin and other cryptocurrencies last year and ranks fourth on the Global Crypto Adoption Index.

Crypto, decentralised finance, and other blockchain systems are part of the government’s vision for not only economic prosperity, but also independence and sovereignty from Russia — a way of building a modern service economy and drawing itself closer to the rest of Europe.

When war started, it launched an official Ukrainian crypto fund.

Within five days, this fund and others set up for similar purposes have raised over $US15 million ($21 million), according to crypto analytics firm Elliptic.

This is nothing compared to the $US650 million ($897 million) in weaponry the Ukrainian army received from the US last year, but it has symbolic importance — the crypto donations are from individuals, not governments, and show the level of popular support for Ukraine.

The Ukrainian war effort is being partly crowdfunded.

The non-profit running the campaign, Come Back Alive, has raised more than $US6.9 million ($9.52 million) through crypto donations, which will be used to distribute body armour, medical kits, and helmets to Ukrainian soldiers.

This could still have happened without crypto, through the international banking system, but then it could have been detected and blocked by a central authority, such as a regulator.

With crypto, it’s impossible to stop.

New kind of autonomous organisations coordinating war aid

Alona Shevchenko hasn’t slept in four days.

Born in eastern Ukraine and currently based in London, after the invasion Ms Shevchenko helped form a DAO (decentralised autonomous organisation) that has now raised more than $US3 million ($4.1 million) in crypto for the Ukrainian army.

A DAO is a bit like a venture capital fund, but the decisions are made by an automated system and crowdfunding process, rather than a board of directors.

These processes are encoded on the blockchain, which is a network of computers running a shared software.

It’s both a way of raising money (often through selling crypto tokens, but also through donations) and a system for governance, requiring users (typically those who own tokens) to vote on proposals.

There are all kinds of DAOs, from business to fundraising (ConstitutionDAO, for instance, recently tried and failed to purchase an original copy of the US constitution at auction).

And now there’s DAOs for war funds.

“It’s an honour to support our armed forces,” Ms Shevchenko said.

“I’m not a pro-war person, but when my friend calls and says my best friend is in the trenches in Kyiv and they have given him an AK without ammunition … we have to do something.”

Specifically, the group plans to support the Come Back Alive organisation.

So why not just donate directly to a charity?

“If someone wants to pick a different charity and donate to them directly, I’m more than happy they do that.”

But DAOs are not just about raising money, she said.

They’re also a way of rapidly organising and connecting people to respond to emergency situations.

Where it would take weeks or months to set up a conventional non-profit, a DAO can be “spun up” in moments.

“A DAO is a community,” she said.

“So many people have helped me rescue people who are stuck at the border or unable to get out of somewhere.

“Somebody in the US messaged to say, ‘I want to send insulin to Ukraine.’ I will connect them with a support group for diabetic people in Ukraine.

“Any kind of help that I need in Ukraine, I can find someone in the community who is able to assist someone else.”

‘We haven’t seen this before’

DAOs sending resources to those in need is the “big new thing” that’s emerged from the war in Ukraine, said blockchain expert Jason Potts, a professor of economics at RMIT.

“We haven’t seen this before,” he said.

“Before we had to rely on trusted international organisations like Red Cross or Amnesty International that are hard to build and expensive to operate.

“What’s striking about the UkraineDAO is how fast it happened. We didn’t realise DAOs would be used for that.”

That doesn’t mean they replace international organisations such as the Red Cross, he added, but they can work alongside them.

In the crypto communities, Ukraine is, “all anyone is talking about.”

“This is a clear demonstration of the fundamental battle-tested use value of this technology,” he said.

“It’s not CryptoKitties and stupid games on the internet; this is helping people around the world gather and organise.”

Aaron Lane, an expert in crypto regulation with RMIT, urges caution.

“People that are wanting to donate to these causes need to do their due diligence around who’s behind these things and what their proposals are.

“It’s a much different form of participation than normal charity donation.”

Can Russia use crypto to evade sanctions?

Ukraine has expressed concern Russian banks, as well as the government and private individuals, will use cryptocurrencies to sidestep the country’s exclusion from the Swift global payments system, which facilities international transfers.

On Sunday, the Ukrainian government asked the world’s largest crypto exchange, Binance, to block Russian customers.

Russian hacking gangs collected about $US400 million ($551 million) worth of cryptocurrency from ransomware attacks last year, which amounted to 74 per cent of global revenue from the crime, according to a recent study.

That’s a big sum, but it’s nothing compared to the estimated $US600 billion ($828 billion) that Russia’s government has in foreign currencies and gold.

The sanctions imposed against the Russian central bank render most of these reserves useless, which has led to a collapse in the value of the rouble.

Even a few hundred million dollars’ worth of bitcoin won’t stop this slide, Dr Lane said.

Either way, he said, blocking Russians from crypto was futile.

It’s almost impossible to cut off a nation-state from trading in crypto and accessing the blockchain network, “because it exists anywhere the internet exists.”

“The network isn’t going to stop a transaction simply because the sender or recipient is in a particular geographic location,” he said.

“The only answer to that would be taking out internet infrastructure.”

He said in five years’ time, crypto might be more widely traded, which would make multinational sanctions like the ones against Russia less effective.

“We haven’t quite experienced something like this before,” he said.

“I think we’re in uncharted territory here.”

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Crypto Exchanges Soon Could Be Forced to Block Russian Users

In the aftermath of the Western sanctions on Russia due to its invasion of Ukraine, crypto exchanges could be soon required to freeze the accounts of their Russian customers, according to Kraken CEO Jesse Powell.

He was replying to a recent request put forward by Ukrainian Deputy Prime Minister and Digital Transformation Minister Mykhailo Fedorov who called on the world’s major crypto exchanges to block Russian users from using their services.

“I understand the rationale for this request but, despite my deep respect for the Ukrainian people, [Kraken] cannot freeze the accounts of our Russian clients without a legal requirement to do so,” Powell said.

“Russians should be aware that such a requirement could be imminent,” he added.

Meanwhile, Fedorov told The Block that Ukraine plans “to make legal demands” and is “preparing letters” as this is “a necessary measure” and “there is no way to identify who is financing the war and who is not.”

Also, the Biden administration is already asking major crypto exchanges to help ensure that Russian individuals and organizations aren’t using cryptoassets to avoid sanctions leveled on them by Washington, Bloomberg reported, citing undisclosed people with direct knowledge of the matter.

“We have assembled a dedicated global compliance task force, including world-renowned sanctions experts, and are taking the steps necessary to ensure we take action against those that have had sanctions levied against them, while minimizing impact to innocent users,” a Binance spokesperson told “Should the international community widen sanctions, we will apply those aggressively as well.”

The exchange also announced it has committed USD 10m minimum to help the humanitarian crisis in Ukraine through its Binance Charity Foundation.

Gemini told, that they “are conducting a robust review of customer accounts and activity to identify any exposure to sanctioned parties or regions and will take appropriate steps as necessary.”

KuCoin, said that “as a neutral platform,” they will not freeze the accounts of any users from any country without a legal requirement.

“And at this difficult time, actions that may increase the tension to impact the rights of innocent people should not be encouraged,” they told

Also, a spokesperson for OKX said the exchange is also reviewing customer accounts and activity to identify any exposure to sanctioned parties: “At this stage, we do not have plans to block a particular region.”

Powell recognized that such requirements could be imposed on crypto exchanges by countries for various reasons, for instance, to thwart anti-government protests, or turn populations against the regimes that rule their countries.

Kraken’s mission is “to bridge individual humans out of the legacy financial system and bring them [into] the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation,” he said.

In Powell’s opinion, if Kraken were to freeze all accounts of residents of countries engaged in unjust military conflicts, the exchange would need to bar US users from using its services.

Meanwhile, per Fedorov, “it’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users.”

At the same time, the Ukrainian official praised US-based but “Ukrainian-born” NFT and digital item marketplace DMarket for its decision to freeze the accounts or users from Russia, and also Belarus which collaborates with the Kremlin on the invasion.

Meanwhile, the deputy prime minister’s request has been criticized by some industry observers. Alex Gladstein from non-governmental organization Human Rights Foundation commented that Fedorov’s statement was “bizarre and cruel,” as Russians under Putin’s “tyranny will have no choice but to turn to BTC and Tether.”

As reported today, Google Trends data shows that both tether (USDT) and bitcoin (BTC)-related searches are on the rise in Russia.

Another Twitter user, @GaetanDella, tweeted that “freezing not only politicians’ wallets but also civilians could be really detrimental for crypto’s future.”

“Another reminder of why owning your keys, being your own bank, and decentralization are important,” added @panosmek.

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Mexican senator plans to propose Bitcoin legal tender bill

Mexico could soon follow in the footsteps of El Salvador in legalizing Bitcoin as legal tender if a proposed bill passes the Senate.

Mexican senator for the State of Nuevo León, Indira Kempis, has stated that she wants to make the country second after El Salvador to adopt Bitcoin. However, the chances of this actually happening are slim at best.
Speaking to local media this week, she noted that she aims to promote the use of Bitcoin in the country and use her political position to achieve that goal.
“We need bitcoin to be legal tender in Mexico, because if it is not so, if we do not make that decision as El Salvador did, it is very difficult to take action.”
During the interview with Diario El Salvador, she added that El Salvador is “undoubtedly becoming the most important hub or laboratory in the world about the future with bitcoin.”

Bitcoin Adoption in Mexico

She commented on the problems of financial exclusion and the unbanked, citing cryptocurrency as a viable solution.
“It is clear to me that financial exclusion is one of the public problems that few of us have addressed with feasible alternatives, and that this type of technology is allowing us to generate an alternative, a way, a solution so that millions of people can be included in the financial system.”
Kempis, working on a legal framework for cryptocurrencies, continued to emphasize the need for legislation that would allow BTC to be used as a currency. She intends to introduce a bill proposing such in the current parliamentary session.
The initiative could be an uphill struggle, however. Last year, Mexico President Andrés Manuel López Obrador said his government is not interested in Bitcoin adoption and is more concerned with tax evasion. His term ends in 2024, so there could be a long wait for Kempis. The central bank also plans to roll out a digital Peso by 2024, as reported by CryptoPotato.
Mexico’s third-richest man, Ricardo Salinas Pliego, thinks otherwise and has doubled down on previous Bitcoin statements. Over the weekend, he tweeted, “You have to buy bitcoin (keep buying when the price is low), then just hold your BTC, forget about selling … Trust me, you’re going to thank me later.”

El Salvador BTC Bonds in Demand

El Salvador’s adoption of Bitcoin has had a mixed reaction; however, it was recently reported that there had been a lot of demand for its BTC Bonds.
According to Blockstream’s Samson Mow, who is backing the effort, the Bitcoin bonds have already got $500 million in “verbal commitments.” This is halfway to hitting the $1 billion target in less than four months.

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Crypto News: Bitcoin and Ethereum Rose — After Sank — After Russian Invasion of Ukraine

The U.S. Capitol is pictured on Dec. 3, 2021. Executives from cryptocurrency companies testified before the House Committee on Financial Services on Dec. 8.

The U.S. Capitol is pictured on Dec. 3, 2021. Executives from cryptocurrency companies testified before the House Committee on Financial Services on Dec. 8.

The prices of Bitcoin and Ethereum plunged Wednesday night after news that Russia had invaded Ukraine. Bitcoin dropped back below $35,000, and Ethereum dropped below $2,400 — though both had risen by Friday afternoon.

It’s been a slow start to the year for crypto. Bitcoin dropped below $34,000 in January — the lowest Bitcoin’s price had been since July 2021. After climbing back up and staying above $40,000 for most of February, Bitcoin dropped back into the $30,000 range on Friday, and lagged throughout the weekend. Ethereum’s price also dropped in recent days.

Meanwhile, a New Jersey lawmaker released an early draft of a bill on regulating the stablecoin market. The New York Stock Exchange filed a trademark application for its own NFT marketplace. Colorado will begin accepting crypto payments for taxes by the end of summer. JP Morgan has officially entered the metaverse. And crypto exchange Coinbase will allow crypto recipients in Mexico to cash out in local currency.

Here’s more on the latest crypto news investors should know about:

  • Cryptocurrency made a splash at the Super Bowl this year, with multiple cryptocurrency exchanges airing ads. The crypto ads captured America’s attention, but not everyone loved them. Senate Banking Chairman Sherrod Brown blasted them during a senate committee hearing last week, saying the ads lacked transparency and “left a few things out.” The hearing was another government meeting on stablecoins, where U.S. lawmakers echoed similar past sentiments about how more regulation is needed.
  • The New York Stock Exchange, the world’s largest stock exchange by market capitalization, wants to be the marketplace for NFTs just like with stocks. The exchange filed an application with the U.S. Patent and Trademark Office to provide an online marketplace for digital goods including NFTs, cryptocurrencies, digital media, and artwork. If the exchange’s plan comes to fruition, it would compete with other popular NFT marketplaces like OpenSea and Rarible.
  • Colorado Governor Jared Polis announced that the state will begin accepting crypto payments for taxes and other state-related transactions by the end of summer. Polis said during an interview with CoinDesk that Colorado will partner with crypto companies to effectively accept and convert Bitcoin into U.S. dollars. “We don’t want to take the speculative risk of holding crypto, so we will have a transactional layer there and it will be entered in our system as dollars,” he says. “For consumer convenience, we want to accept payment in a wide variety of cryptocurrencies, just as we do with credit cards.”
  • New Jersey Rep. Josh Gottheimer unveiled an early draft of legislation last week that would place clear definitions around U.S. dollar-backed stablecoins. The proposed legislation would designate certain stablecoins as “qualified,” making them redeemable on a one-to-one basis for U.S. dollars, and institute traditional deposit insurance on stablecoin holdings. The bill also states that qualified stablecoins would only be issued by banks or non-bank institutions that satisfy certain regulations.
  • JP Morgan has officially entered the metaverse, opening a lounge in Decentraland, a virtual world based on blockchain technology. The “Onyx lounge” was unveiled along with a report from the bank outlining “limitless” opportunities for businesses in the metaverse and why there is “explosive interest.” JP Morgan is the largest bank in the U.S. and the first to participate in the metaverse.
  • Coinbase announced it’s launching a service that allows cryptocurrency recipients in Mexico to cash out their funds in pesos. The service will be offered at over 37,000 locations across the country, free of charge through March 31, after which customers will be charged a “nominal fee that’s still 25-50% cheaper” than traditional international payment options, according to a Coinbase blog post. Cryptocurrency has drawn interest for cross-border payments and money transfers, because of its potential as a faster and cheaper method to transact compared to more traditional options.

Bitcoin is the largest cryptocurrency by market cap, and a good indicator of the crypto market in general, since other coins like Ethereum (and smaller altcoins) tend to follow its trends. Even though Bitcoin recently set another new all-time high, it was a pretty normal uptick for the crypto, which is notorious for its volatility. That’s not to say investors should take swings in either direction lightly, and this is also why investing experts recommend not making any major investment changes based on these normal fluctuations.

Cryptocurrency is still very new, and everything from innovation to regulation can have outsize impact for investors. Here’s how you can invest smartly, regardless of what’s making news or Bitcoin’s price swings.

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