Cryptocurrencies in the heart of the war in Ukraine

5 avril 2022

Digital currencies are a preferred solution for sending donations to Ukraine, although they are not about to replace the national currency. Conversely, the specter of circumventing sanctions through them seems to have been dismissed for the time being.
Cryptocurrencies are inviting themselves into the war in Ukraine… and are proving to be a valuable means of sending donations to local authorities and associations. "Thanks to their ease of use, cryptos have proven to save lives", posted on Twitter Alex Borniakov, Ukrainian Deputy Minister for Digital Transformation. In cyberspace, Russia has not yet used all its capabilities

About 100 million dollars (91 million euros) have been collected in this way since the start of the conflict on February 24. The Ukrainian government has, among other things, created a dedicated site. If bitcoin is the star of donations, more than 70 crypto-assets are accepted. Cryptocurrencies can transit across the globe in moments, far from the often long and expensive procedures of international bank transfers. The Cross highlights the places or the subjects where the dignity of the men and women of this time is at stake.

Crypto legalized in Ukraine

The story does not end there. Last week, President Volodymyr Zelensky made cryptocurrencies legal tender in the country. The interest? The invasion of Ukraine by Russia and its economic repercussions have caused the value of the currencies of the belligerent countries to fall while severely limiting the capacities of their respective banking systems.

“Having a bank account means having credit on your bank, which poses a problem in the event of the system going bankrupt,” explains Alexandre Stachchenko, who heads the crypto-asset branch at the consulting firm KPMG. Holding a cryptocurrency portfolio allows you to own the asset yourself. »

Developing uses

These digital currencies act outside of any control of a central bank, since the authenticity of payments is guaranteed thanks to blockchain technology, where a succession of networked computers validates the operations. The legal framework is in place in Ukraine, but it is difficult to imagine paying the neighborhood baker in bitcoin overnight.
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“The measure was taken urgently, they must be given time to organize themselves, analyzes Hervé Alexandre, professor at Paris Dauphine University and president of the Fintech chair. Technologies are emerging to allow its use in a very simple way: bitcoin has been used as currency in refugee camps via basic telephones. The user just needs to have a private key. »

And the Russians?

So, if the use of cryptocurrencies in the context of the conflict is so easy, why could not the Russians also use it? In fact, the majority of crypto exchanges take place on platforms, Coinbase and Binance to name a few, and the latter have agreed to apply the sanctions targeting certain Russian nationals. They blocked all sanctioned oligarchs from accessing their digital wallets.

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The Ukrainian government wanted to go further. He asked the platforms to ban access to all Russian nationals, which they refused. In February, the Bloomberg agency echoed a Russian government estimate that its nationals owned the equivalent of 200 billion dollars (182 billion euros) in cryptocurrencies, or 12% of the total.
“Very theoretical”

However, the platforms deny that they can be used to circumvent the sanctions: cryptocurrencies offer good traceability, according to them, since the operations validated thanks to the blockchain are public. In France, the Minister of the Economy Bruno Le Maire announced on March 2 that he wanted to take “measures on cryptocurrencies which must not be used to circumvent sanctions”. This context has accelerated the a<p>doption by the European Parliament of the Mica regulation, which aims to regulate platforms, now supervised like banks.

The platforms are already under close surveillance across the Atlantic. "The vast majority of them are domiciled in the United States," notes Alexander Stachchenko. The idea that sanctions can be circumvented via cryptocurrencies remains very theoretical. »