Tom Spiller is the former President of the Conservative National Convention and chaired the 2017 Conservative Party Conference.
Can you imagine your life’s savings dissolving in front of your eyes? Or your local banking system simply buckling and failing at a time of extreme danger, when your only concern is how to get your family to safety?
It is a horrifying part of the heart-breaking situation that tens of millions of ordinary Ukrainians have been forced to deal with since the Russian invasion of Ukraine began.
On 24 February 2022, the government of Ukraine declared martial law, alongside this came the closure of the country’s foreign exchange market and severe restrictions on domestic access to cash.
At a stroke many ordinary civilians lost the freedom to fund their daily lives or finance their escape from the warzone.
Crypto to the rescue
En masse, Ukrainians turned to crypto for help. Kuna, a Ukrainian ‘cryptoexchange’, recently shared data which showed the Ukrainians were buying stablecoin Tether for up to $1.10 – quite a statement, given that its value is pegged at one American dollar.
As you read this, Ukrainians are using crypto to pay for essentials, such as bread and electricity, and to keep their daily lives going amidst the ruins of their shattered economy, in the absence of the orthodox financial system that they previously relied upon.
And en masse, the cryptosphere turned to provide immediate help to Ukraine. On 24 February one of the world’s largest cryptoexchanges, FTX, donated $25 to each Ukrainian account holder.
Two days later, the Ukrainian government tweeted details that allowed anyone in the world to donate funds directly to it in various major cryptocurrencies. By 2 March they had received $40m in cryptocurrency and a further $7 million in NFTs (non-fungible tokens), including one rare, high-value NFT valued at approximately $250,000.
One day earlier, on 1 March, Ukraine had started deploying those donations and in less than a week it had purchased thousands of bullet-proof vests, helmets, thermal imagers, medicines, and walkie-talkies for their front line troops.
Over the last year or so various pundits have referred to the “disintermediating” benefits of crypto. Those past conversations seem sterile in the extreme in light of events today, but there could not be a more stark and impactful demonstration of this than the fact that Ukraine has in effect crowdfunded part of its defensive efforts at lightning speed.
One further illustrative story circulating on the internet is of two Danish journalists who found themselves trapped a long way from home without access to cash or a local banking system in the immediate aftermath of the Russian invasion. Thankfully, they were able to quickly purchase a car using Bitcoin and immediately headed for the border at speed, along with millions of others.
Ukraine’s high tech economy
I have listed a number of examples of ways in which crypto has helped the government and people of Ukraine, but how did Ukraine find itself in a position to benefit from crypto in its time of need?
Prior to the invasion, Ukraine enjoyed a successful IT sector, which was worth $7bn in 2021 alone. Ukraine proudly marketed itself to the world as a tech-friendly country, and in a recent state visit to America in August 2021, President Zelensky referred to Ukraine’s high tech economy and its embrace of crypto as a reason for American business to invest into his country.
And he was right to say that: leading crypto research firm Chainalysis ranked Ukraine as the fourth highest global adopter of cryptocurrency in its recent study.
Thus Ukraine had already passed legislation paving the way to a centrally-issued digital currency, and in the days after the invasion began Ukraine passed a law legalising and regulating crypto – a feat that the likes of America and Britain have yet to accomplish.
This sophistication and forward-thinking on crypto is a literal lifeline to many Ukrainians today who need to buy bread and water, and try to find a store of value in times of war. Thank God for crypto.
The rehabilitation of crypto
It is time to recognise the extreme good that crypto is doing in Ukraine.
And although it is probably unwise for me to say this in light of the recent, ugly Russophobia that has at times punctuated the debate on the British response to the war, I am also pleased that crypto will be there to assist ordinary Russian people who now have to try to live their lives whilst the value of their own currency dissolves.
Crypto assists Ukrainians and Russians, and all ordinary people who, through no fault of their own, are forced to seek ways of coping in situations of government collapse or long-term economic mismanagement, as in the examples of Argentina, Turkey, Nigeria and other countries. To these people crypto represents their best chance at pulling themselves out from under the dead hand of the state.
Future Ukrainian fundraising efforts
Amongst those rushing to support Ukraine were Russian political activists and musicians Pussyriot who launched a fundraising vehicle named UkraineDAO which received approximately $6.75m in crypto. Other examples abound, and no doubt further similarly beneficial crypto-orientated projects will emerge over time as the invasion continues.
For its part, the Ukrainian government plans to conduct another exercise in crypto fundraising by issuing its own NFTs in the near future. Please consider buying one when they are launched – it will do a lot more good, more quickly than the purchase of any badge or wristband. Slava Ukraini.