In conjunction with the military assaults, Ukraine and Russia seem to be waging a parallel war in the crypto sphere. While Ukraine has publicly requested cryptocurrency donations since the start of the conflict, the country has just frozen a wallet used to finance Russian military campaigns.
The First Crypto World War?
Observers have already dropped the term crypto world war just weeks after the war started in Ukraine. From the first Russian attacks, Ukraine publicly requested donations of cryptocurrencies to organize its defense. Why cryptocurrencies? Mainly because with digital assets, funds are quickly available. In the month of April, for example, Ukraine was able to collect the equivalent of $100 million in cryptos. The government acknowledges that the sum is much lower than that obtained in fiat currencies. However, in the absence of an intermediary, the funds are quickly available.
Russia is also partly fueling the crypto war on its side. According to a recent report by blockchain research firm Chainalysis, the country has so far raised nearly $2.2 million. The Russians mainly received donations in bitcoin (BTC) and ether (ETH). The sum remains derisory compared to that obtained by Ukraine. Although the contributions are “small”, the Russians claim that these provide significant support to the effectiveness of his troops. The funds are mainly allocated to propaganda on various websites and to the purchase of military equipment (drones, communication devices, weapons, bulletproof vests, etc.).
War in Ukraine and crypto blockade
Since the beginning of the war in Ukraine, international coalitions have inflicted financial sanctions on Russia. These aim to weaken its ability to finance the war, while sparing vital sectors such as food, agriculture, health and pharmaceuticals. The penalties correspond to measures restricting the import and export of certain goods. Affected products are carefully selected to maximize impact on Russia and minimize harm to other countries. Faced with these sanctions, experts predict a rise in inflation in Russia. An increase that can climb up to 22%.
At the same time, Ukraine has just organized the crypto blockade of Russia. The Ukrainian Security Service SSU (Security Service of Ukraine) seized and blocked a cryptocurrency wallet. This agency works on tracking funds and transferring them under Ukrainian jurisdiction. the wallet, used to finance the Russian military campaign, belonged to an unidentified Russian citizen. The wallet contained nearly $19,500 in cryptos. The seizure was reportedly possible thanks to evidence provided by anonymous foreign crypto companies. The SSU warns that the hunt for wallets of pro-Russians is open. War is declared.
Ukraine takes advantage of donations to defend itself. Russia uses it to finance its army. The war in Ukraine has truly acted as a catalyst for crypto transactions. Realizing the potential of digital assets on multiple levels, the two countries have obviously decided to wage a more sophisticated parallel war. For observers, this situation could accelerate the establishment of a framework that will regulate cryptocurrencies. And this, knowing that Russia can also consider going through this route to circumvent the sanctions.
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