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Cryptocurrency is subject to much debate regarding its advantages and disadvantages. Some believe it can revolutionize the financial system and prevent periodic financial crises caused by specific players through centralized control. Some argue that it is primarily used for money laundering because it cannot be traced and can be easily exploited for illegal activities.
Cryptocurrency is a highly polarizing topic, with supporters and opponents on both sides of the debate. However, just like coins, virtual currencies have two faces that can be used for good or bad.
The debate surrounding the use of cryptocurrencies for money laundering is highly controversial, especially when it also applies to fiat currencies despite strict KYC and AML regulations. Meanwhile, the active use of cryptocurrencies has far outweighed the concerns of skeptics.
A typical example is its use as a donation during the war in Ukraine. The amount of cryptocurrencies received for humanitarian aid and support for the Ukrainian military was significantly higher than that used for illicit purposes such as funding hacker groups and supporting mercenary organizations.
Immediately after the Russian invasion began on February 24, 2022, Ukraine began using all means possible to raise funds for defense and humanitarian aid. Cryptocurrency donations were no exception.
As of July 2023, crypto donations to Ukraine reached $225 million, according to Crystal Blockchain Analytics. Among the organizations that raised the most money were Aid For Ukraine (more than $60 million), Come Back Alive (more than $28 million), and Serhiy Prytula Charity Foundation (more than $3.2 million).
In particular, Aid For Ukraine is a crypto fund actively promoted by the Ministry of Digital Transformation of Ukraine, a government agency. The effort was organized by his two companies with Ukrainian roots, Everstake, one of the most trusted validators in the world, and Kuna crypto exchange.
This marks a significant milestone in which cryptography initiatives are supported by the state. This provides a positive example to other countries on how cryptocurrencies can be leveraged for the greater good.
Another notable example is the sale of the Ukrainian flag as an NFT for 2,258 ETH (approximately $6.75 million) in an auction organized by the decentralized autonomous organization Ukraine DAO.
For those unfamiliar with this organizational structure, a DAO is a blockchain-native organization governed by smart contracts that allows individuals around the world to organize around a common purpose and contribute to decision-making. You will be able to do it.
DAO objectives range from planting trees in communities to finding a cure for cancer. In recent years, DAOs have gained popularity mainly due to their decentralized nature, transparency, and collective decision-making. The advantage of this structure is that funds are not centrally managed. In other words, the community decides how to spend the treasury.
As a result, to help Ukrainians, a community of like-minded people founded the Ukraine DAO, which donated over $7 million in cryptocurrencies during the war and continues to draw attention to the Ukraine-Russia war. There is.
The war also affected the personal use of cryptocurrencies by Ukrainian citizens. According to statistics from the United Nations High Commissioner for Refugees, as of February 2024, approximately 6.5 million Ukrainians have fled the country due to the Russian invasion.
To prevent capital from leaving the country under martial law, the Ukrainian government has placed restrictions on cross-border transactions for its citizens. As a result, refugees who leave the country find it difficult to access bank accounts. For various reasons, many of them were unable to open bank accounts in their new countries. For such people, cryptocurrencies have emerged as a viable alternative.
The example given shows how Ukraine used in its defense efforts all possible tools provided by blockchain technology, including cryptocurrencies, NFTs, DAOs, and contributions from key industry players. Masu.
Despite the large influx of donations in the form of cryptocurrencies in Ukraine, Russia has also actively used cryptocurrencies during the war, although not necessarily in a legal way.
The Elliptic Report, produced during the first year of the invasion, reveals that more than 10% of pro-Russian donations were sourced from illicit channels such as sanctioned organizations and dark web markets.
Nevertheless, the total amount of donations received by Russian organizations is significantly lower than in Ukraine. Chainalysis reports that the Russian organization received approximately $5.4 million in 2023. Unfortunately, many of these organizations involved in cryptocurrency financing publicly support and glorify potential war crimes and crimes against humanity.
The war appears to have accelerated the adoption of virtual currencies. Despite legislative delays, many Ukrainians have already accepted cryptocurrencies and are eager for a legal framework to be established.
The unprovoked attack has delayed Ukraine's plans to become one of the most attractive destinations for cryptocurrency businesses. However, authorities are working to support the industry by establishing a legal framework that will help it develop and grow. It is expected that the necessary tax law reforms will be completed in the near future.
Despite persistent concerns about donations to illegal groups and the use of cryptocurrencies for money laundering and ransomware attacks, blockchain and cryptocurrencies have brought significant benefits to Ukraine. It strengthened national resilience during this difficult period and garnered global support in the face of Russian aggression.
