The role of cryptocurrencies like bitcoin has been a topic of discussion during the Russian invasion of Ukraine, particularly due to the economic sanctions placed on Russia. Cryptocurrencies are also playing a role in helping Ukrainian refugees move money out of the country due to their ability to cross borders regardless of rules or regulations.
“The objective of placing economic sanctions on Russia was to essentially cut it off from the global financial system, which in turn caused the ruble to plunge nearly 30% against the dollar. What has resulted is a debate on whether cryptocurrencies could be, and should be, a way for those on the sanctions lists to bypass the restrictions,” comments James Turner, Director at company formation specialists, Turner Little.
Transactions between Bitcoin and rubles surged by 132% in the days immediately after Russia invaded Ukraine, according to data group Kaiko.
“With no access to banks across the world, and the currency having lost all value outside the country, bitcoin might be a Russian’s only option. We’ve also seen bitcoin often referred to as ‘digital gold’, but the reality is, cryptocurrencies like bitcoin are often not issued or controlled by a central entity, and one of the biggest misconceptions is that it is untraceable. But the reality is it’s possible to track the movement of funds from one account to another quite easily,” he adds.
“On the other hand, we’ve also seen that cryptocurrencies have been used to support Ukrainians, with the Ukrainian government itself soliciting donations in Crypto, having raised $54 million as of March 11th, 2022. Crypto has proved beneficial for people in crisis, but isn’t always the easiest option. It’s beneficial to those who already have it, especially in a country like Ukraine which ranked fourth in the world in terms of crypto adoption. Whether it’s been more beneficial for one side or the other amidst a war is yet to be seen, but what is clear though, is that cryptocurrencies have given people a way to work outside of traditional financial institutions during a time of political and economic conflict,” says James.
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